Rally Quadcopters plans to sell a standard quadcopter (toy drone) for $45 and a deluxe quadcopter for $55. Rally purchases the standard quadcopter for $25 and the deluxe quadcopter for $30. Management expects to sell two deluxe quadcopters for every three standard quadcopters. The company's monthly fixed expenses are $23,100. How many of each type of quadcopter must Rally sell monthly to breakeven? To earn $15,400? First identify the formula to compute the sales in units at various levels of operating income using the contribution margin approach. (Abbreviations used: Avg. = average, and CM = contribution margin.) >/Weighed-avg. CM per unit Breakeven sales in units ( Operating income Fixed expenses Next compute the weighted-average contribution margin per unit. First identify the formula labels, then complete the calculations step by step. Standard Deluxe Total Sale price per unit Deduct Variable expense per unit Contribution margin per unit Sales mix in units Contribution margin Weighted average contribution margin per unit How many of each type of quadcopter must Rally sell monthly to breakeven? Rally must sell 866.25 standard quadcopters and 577.50 deluxe quadcopters to breakeven. How many of each type of quadcopter must Rally sell monthly to earn $15,400? To reach the target operating income, Rally must sell 1443.75 standard quadcopters and 45 35 10 3 55 30 25 30 50 5 80 16 962.5 deluxe quadcopters.
Rally Quadcopters plans to sell a standard quadcopter (toy drone) for $45 and a deluxe quadcopter for $55. Rally purchases the standard quadcopter for $25 and the deluxe quadcopter for $30. Management expects to sell two deluxe quadcopters for every three standard quadcopters. The company's monthly fixed expenses are $23,100. How many of each type of quadcopter must Rally sell monthly to breakeven? To earn $15,400? First identify the formula to compute the sales in units at various levels of operating income using the contribution margin approach. (Abbreviations used: Avg. = average, and CM = contribution margin.) >/Weighed-avg. CM per unit Breakeven sales in units ( Operating income Fixed expenses Next compute the weighted-average contribution margin per unit. First identify the formula labels, then complete the calculations step by step. Standard Deluxe Total Sale price per unit Deduct Variable expense per unit Contribution margin per unit Sales mix in units Contribution margin Weighted average contribution margin per unit How many of each type of quadcopter must Rally sell monthly to breakeven? Rally must sell 866.25 standard quadcopters and 577.50 deluxe quadcopters to breakeven. How many of each type of quadcopter must Rally sell monthly to earn $15,400? To reach the target operating income, Rally must sell 1443.75 standard quadcopters and 45 35 10 3 55 30 25 30 50 5 80 16 962.5 deluxe quadcopters.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Rally Quadcopters plans to sell a standard quadcopter (toy drone) for $45 and a deluxe quadcopter for $55. Rally purchases the standard quadcopter for $25 and the deluxe quadcopter for $30. Management expects to sell two deluxe
quadcopters for every three standard quadcopters. The company's monthly fixed expenses are $23,100. How many of each type of quadcopter must Rally sell monthly to breakeven? To earn $15,400?
First identify the formula to compute the sales in units at various levels of operating income using the contribution margin approach. (Abbreviations used: Avg. = average, and CM = contribution margin.)
(
Operating income
Fixed expenses
>/Weighed-avg. CM per unit
Breakeven sales in units
Next compute the weighted-average contribution margin per unit. First identify the formula labels, then complete the calculations step by step.
Standard
Deluxe
Total
Sale price per unit
Deduct Variable expense per unit
45
35
55
30
Contribution margin per unit
Sales mix in units
Contribution margin
Weighted average contribution margin per unit
How many of each type of quadcopter must Rally sell monthly to breakeven?
Rally must sell 866.25 standard quadcopters and 577.50 deluxe quadcopters to breakeven.
How many of each type of quadcopter must Rally sell monthly to earn $15,400?
To reach the target operating income, Rally must sell 1443.75 standard quadcopters and 962.5 deluxe quadcopters.
10
3
30
25
2
50
5
80
16
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