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Requirement 1. What is the Record 1-2-3 5.0 breakeven point in units, assuming that the planned 60% / 40% sales mix is attained? The breakeven point is units for new customers and units for upgrade customers.

Requirement 1. What is the Record 1-2-3 5.0 breakeven point in units, assuming that the planned 60% / 40% sales mix is attained? The breakeven point is units for new customers and units for upgrade customers.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Record 1-2-3 is a top-selling electronic spreadsheet product. Record is about to release version 5.0. It divides its customers into two groups: new customers and upgrade customers (those who previously purchased Record 1-2-3, 4.0 or earlier versions). Although the same physical product is provided to each customer group, sizable differences exist in selling prices and variable marketing costs: (Click the icon to view the price and cost information.) The fixed costs of Record 1-2-3 5.0 are $13,500,000. The planned sales mix in units is 60% new customers and 40% upgrade customers. Read the requirements. Requirement 1. What is the Record 1-2-3 5.0 breakeven point in units, assuming that the planned 60% / 40% sales mix is attained? The breakeven point is units for new customers and units for upgrade customers. Requirements 1. 2. 3. What is the Record 1-2-3 5.0 breakeven point in units, assuming that the planned 60% / 40% sales mix is attained? If the sales mix is attained, what is the operating income when 170,000 total units are sold? Show how the breakeven point in units changes with the following customer mixes: a. New 50% and upgrade 50% b. New 80% and upgrade 20% c. Comment on the results. Print Done X Data Table Selling price Variable costs Manufacturing Marketing Contribution margin $ New Customers Upgrade Customers $ 225 $ Print 20 60 S 80 145 S Done 20 5 $ 120 25 95
Transcribed Image Text:Record 1-2-3 is a top-selling electronic spreadsheet product. Record is about to release version 5.0. It divides its customers into two groups: new customers and upgrade customers (those who previously purchased Record 1-2-3, 4.0 or earlier versions). Although the same physical product is provided to each customer group, sizable differences exist in selling prices and variable marketing costs: (Click the icon to view the price and cost information.) The fixed costs of Record 1-2-3 5.0 are $13,500,000. The planned sales mix in units is 60% new customers and 40% upgrade customers. Read the requirements. Requirement 1. What is the Record 1-2-3 5.0 breakeven point in units, assuming that the planned 60% / 40% sales mix is attained? The breakeven point is units for new customers and units for upgrade customers. Requirements 1. 2. 3. What is the Record 1-2-3 5.0 breakeven point in units, assuming that the planned 60% / 40% sales mix is attained? If the sales mix is attained, what is the operating income when 170,000 total units are sold? Show how the breakeven point in units changes with the following customer mixes: a. New 50% and upgrade 50% b. New 80% and upgrade 20% c. Comment on the results. Print Done X Data Table Selling price Variable costs Manufacturing Marketing Contribution margin $ New Customers Upgrade Customers $ 225 $ Print 20 60 S 80 145 S Done 20 5 $ 120 25 95
The Swift Meal has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $430,500 per year. Service varies from a cup of coffee to full meals. The average sales check per customer is $8.75. The average cost of food and other variable costs for each customer is $3.50. The income tax rate is 30%. Target net income is $117,600. Requirements 1. Compute the revenues needed to earn the target net income. 2. How many customers are needed to break even? To earn net income of $117,600? 3. Compute net income if the number of customers is 155,000.
Transcribed Image Text:The Swift Meal has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $430,500 per year. Service varies from a cup of coffee to full meals. The average sales check per customer is $8.75. The average cost of food and other variable costs for each customer is $3.50. The income tax rate is 30%. Target net income is $117,600. Requirements 1. Compute the revenues needed to earn the target net income. 2. How many customers are needed to break even? To earn net income of $117,600? 3. Compute net income if the number of customers is 155,000.
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