Problem 16.32 Using a Computer Spreadsheet to Solve Multiple-Product Break-Even:
ID: 2450254 • Letter: P
Question
Problem 16.32
Using a Computer Spreadsheet to Solve Multiple-Product Break-Even: Varying Sales Mix
More-Power Company has projected sales of 75,000 regular sanders and 30,000 mini-sanders for next year. The projected income statement is as follows:
Required:
1. For each of the following possible sales mixes, calculate operating income:
2. Calculate the break-even units for each product for each of the preceding sales mixes. Round the number of break-even packages to two decimal places (and use this figure for intermediate calculations). Round the number of break-even regular and mini-sanders to the nearest whole unit.
Problem 16.32
Using a Computer Spreadsheet to Solve Multiple-Product Break-Even: Varying Sales Mix
More-Power Company has projected sales of 75,000 regular sanders and 30,000 mini-sanders for next year. The projected income statement is as follows:
Required:
1. For each of the following possible sales mixes, calculate operating income:
Operating Income a. $ b. $ c. $ d. $2. Calculate the break-even units for each product for each of the preceding sales mixes. Round the number of break-even packages to two decimal places (and use this figure for intermediate calculations). Round the number of break-even regular and mini-sanders to the nearest whole unit.
a b c d Break-even packages Break-even regular sanders Break-even mini-sandersExplanation / Answer
Possible Sales Mix 75000 37500 112500 Sales 3000000 2250000 5250000 Less: Variable expense 18,00,000 11,25,000 2925000 Contribution margin 12,00,000 11,25,000 23,25,000 Less: Direct fixed expenses 2,50,000 4,50,000 7,00,000 Unallocated fixed Expense 6,00,000 Operating Income 9,50,000 6,75,000 10,25,000 Regular sanders mini-sanders TOTAL Possible Sales Mix 60000 60000 120000 Sales 2400000 3600000 6000000 Less: Variable expense 14,40,000 18,00,000 3240000 Contribution margin 9,60,000 18,00,000 27,60,000 Less: Direct fixed expenses 2,50,000 4,50,000 7,00,000 Unallocated fixed Expense 6,00,000 Operating Income 7,10,000 13,50,000 14,60,000 Regular sanders mini-sanders TOTAL Possible Sales Mix 30000 90000 120000 Sales 1200000 5400000 6600000 Less: Variable expense 7,20,000 27,00,000 3420000 Contribution margin 4,80,000 27,00,000 31,80,000 Less: Direct fixed expenses 2,50,000 4,50,000 7,00,000 Unallocated fixed Expense 6,00,000 Operating Income 2,30,000 22,50,000 18,80,000 Regular sanders mini-sanders TOTAL Possible Sales Mix 30000 60000 90000 Sales 1200000 3600000 4800000 Less: Variable expense 7,20,000 18,00,000 2520000 Contribution margin 4,80,000 18,00,000 22,80,000 Less: Direct fixed expenses 2,50,000 4,50,000 7,00,000 6,00,000 Operating Income 2,30,000 13,50,000 9,80,000 Operating Income a 10,25,000 b 14,60,000 c 18,80,000 d 9,80,000 package contribution margin Product Contribution Sales Mix package contribution margin Regular sanders 16 6 96 mini-sanders 30 3 90 186 Break-even point package Fixed cost/Package contribution margin 6989 Regular sanders mini-sanders Break-even 41935 20968 Product Contribution Sales Mix package contribution margin Regular sanders 16 1 16 mini-sanders 30 1 30 46 Break-even point package Fixed cost/Package contribution margin 28261 Regular sanders mini-sanders Break-even 28261 28261 Product Contribution Sales Mix package contribution margin Regular sanders 16 1 16 mini-sanders 30 3 90 106 Break-even point package Fixed cost/Package contribution margin 12264 Regular sanders mini-sanders Break-even 12264 36792 Product Contribution Sales Mix package contribution margin Regular sanders 16 1 16 mini-sanders 30 2 60 76 Break-even point package Fixed cost/Package contribution margin 17105 Regular sanders mini-sanders Break-even 17105 34211 a b c d Break-even packages 6989 28261 12264 17105 Break-even regular sanders 41935 28261 12264 17105 Break-even mini-sanders 20968 28261 36792 34211