The Stackpole Company retails two products: a standard and a deluxe version of a luggage carrier. The budgeted income statement for next period is as follows: Required Standard Carrier Deluxe Carrier Total Units sold 187,500 62,500 250,000 Revenues at $28 and $50 per unit $5,250,000 $3,125,000 $8,375,000 Variable costs at $18 and $30 per unit 3,375,000 1,875,000 5,250,000 Contribution margins at $10 and $20 per unit $1,875,000 $1,250,000 3,125,000 Fixed costs 2,250,000 Operating income $875,000 Compute the breakeven point in unit
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
The Stackpole Company retails two products: a standard and a deluxe version of a luggage carrier. The
Standard Carrier Deluxe Carrier Total Units sold 187,500 62,500 250,000 Revenues at $28 and $50 per unit $5,250,000 $3,125,000 $8,375,000 Variable costs at $18 and $30 per unit 3,375,000 1,875,000 5,250,000 Contribution margins at $10 and $20 per unit $1,875,000 $1,250,000 3,125,000 Fixed costs 2,250,000 Operating income $875,000
- Compute the breakeven point in units, assuming that the planned sales mix is attained.
- Compute the breakeven point in units (a) if only standard carriers are sold and (b) if only deluxe carriers are sold.
- Suppose 250,000 units are sold but only 50,000 of them are deluxe. Compute the operating income. Compute the breakeven point in units. Compare your answer with the answer to requirement 1. What is the major lesson of this problem?
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