Smith Company can produce two types of carpet cleaners, Brighter and Cleaner. Data on these two products are as follows: Sales volume in units Brighter 400 Cleaner 600 Unit sales price Unit variable cost $ 1,000 200 $ 1,000 700 The number of machine hours to produce one unit of Brighter is 1, while the number of machine hours for each unit of Cleaner is 2. Total fixed costs for the manufacture of both products are $270,000. Required: 1. Determine the breakeven point in total units for Smith Company, based on the assumption that the sales mix (on the basis of relative sales volume in units) remains constant. Use the weighted-average contribution margin approach. 2. At this breakeven level, how many units of each product must be sold? Due to rounding, the total breakeven units for Requirement 2 may differ slightly than in Requirement 1. 3. Using the Indirect approach, what is the overall breakeven point in sales dollars? Use the breakeven units computed in Requirement 1. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine the breakeven point in total units for Smith Company, based on the assumption that the sales mix (on the basis of relative sales volume in units) remains constant. Use the weighted-average contribution margin approach. (Enter Sales mix (based on units) as a whole percentage and round Weighted-average CM per unit to two decimal places.) Contribution margin/unit Sales mix (based on units) Weighted-average CM per unit Total fixed costs to be recovered Total units to breakeven Brighter % Cleaner % Required 1 Required 2 >
Smith Company can produce two types of carpet cleaners, Brighter and Cleaner. Data on these two products are as follows: Sales volume in units Brighter 400 Cleaner 600 Unit sales price Unit variable cost $ 1,000 200 $ 1,000 700 The number of machine hours to produce one unit of Brighter is 1, while the number of machine hours for each unit of Cleaner is 2. Total fixed costs for the manufacture of both products are $270,000. Required: 1. Determine the breakeven point in total units for Smith Company, based on the assumption that the sales mix (on the basis of relative sales volume in units) remains constant. Use the weighted-average contribution margin approach. 2. At this breakeven level, how many units of each product must be sold? Due to rounding, the total breakeven units for Requirement 2 may differ slightly than in Requirement 1. 3. Using the Indirect approach, what is the overall breakeven point in sales dollars? Use the breakeven units computed in Requirement 1. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine the breakeven point in total units for Smith Company, based on the assumption that the sales mix (on the basis of relative sales volume in units) remains constant. Use the weighted-average contribution margin approach. (Enter Sales mix (based on units) as a whole percentage and round Weighted-average CM per unit to two decimal places.) Contribution margin/unit Sales mix (based on units) Weighted-average CM per unit Total fixed costs to be recovered Total units to breakeven Brighter % Cleaner % Required 1 Required 2 >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Smith Company can produce two types of carpet cleaners, Brighter and Cleaner. Data on these two products are as follows:
Sales volume in units
Brighter
400
Cleaner
600
Unit sales price
Unit variable cost
$ 1,000
200
$ 1,000
700
The number of machine hours to produce one unit of Brighter is 1, while the number of machine hours for each unit of Cleaner is 2.
Total fixed costs for the manufacture of both products are $270,000.
Required:
1. Determine the breakeven point in total units for Smith Company, based on the assumption that the sales mix (on the basis of
relative sales volume in units) remains constant. Use the weighted-average contribution margin approach.
2. At this breakeven level, how many units of each product must be sold? Due to rounding, the total breakeven units for
Requirement 2 may differ slightly than in Requirement 1.
3. Using the Indirect approach, what is the overall breakeven point in sales dollars? Use the breakeven units computed in
Requirement 1.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Determine the breakeven point in total units for Smith Company, based on the assumption that the sales mix (on the basis of
relative sales volume in units) remains constant. Use the weighted-average contribution margin approach. (Enter Sales mix
(based on units) as a whole percentage and round Weighted-average CM per unit to two decimal places.)
Contribution margin/unit
Sales mix (based on units)
Weighted-average CM per unit
Total fixed costs to be recovered
Total units to breakeven
Brighter
%
Cleaner
%
Required 1
Required 2 >
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