Woodland Wearables produces two models of a smart watch, the Basic and the Flash. The watches have the following characteristics: Basic $ 330 $ 250 39,000 Selling price per watch Variable cost per watch Expected sales (watches) per year The total fixed costs per year for the company are $1,516,800. Flash $490 $ 250 13,000 Required: a. What is the anticipated level of profits for the expected sales volumes? b. Assuming that the product mix is the same at the break-even point, compute the break-even point in units. c. If the product sales mix were to change to nine Basic watches for each Flash watch, what would be the new break-even volume for Woodland Wearables?
Woodland Wearables produces two models of a smart watch, the Basic and the Flash. The watches have the following characteristics: Basic $ 330 $ 250 39,000 Selling price per watch Variable cost per watch Expected sales (watches) per year The total fixed costs per year for the company are $1,516,800. Flash $490 $ 250 13,000 Required: a. What is the anticipated level of profits for the expected sales volumes? b. Assuming that the product mix is the same at the break-even point, compute the break-even point in units. c. If the product sales mix were to change to nine Basic watches for each Flash watch, what would be the new break-even volume for Woodland Wearables?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Woodland Wearables produces two models of a smart watch, the Basic and the Flash. The watches have the following characteristics:
Basic
$ 330
$ 250
39,000
Selling price per watch
Variable cost per watch
Expected sales (watches) per year
The total fixed costs per year for the company are $1,516,800.
Flash
$490
$ 250
13,000
Required:
a. What is the anticipated level of profits for the expected sales volumes?
b. Assuming that the product mix is the same at the break-even point, compute the break-even point in units.
c. If the product sales mix were to change to nine Basic watches for each Flash watch, what would be the new break-even volume for
Woodland Wearables?
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