Carey Enterprises sells bottles of natural pesticides: Bug-gone, Aphid-eliminato
ID: 2781281 • Letter: C
Question
Carey Enterprises sells bottles of natural pesticides: Bug-gone, Aphid-eliminator, and Slug-less. The company has annual fixed costs of $291,000. Last year, the company sold 5,600 bottles of its pesticide in the ratio of 3:4:3. Carey's accounting department has compiled the following data related to the three pesticides:
Required:
A. Calculate the total number of bottles that must be sold for the company to break even. If required, round your answer to nearest whole number.
_____total units
B. Calculate the number of bottles of Bug-gone, Aphid-eliminator, and Slug-less that must be sold to break even. If required, round your intermediate and final answers to nearest whole number.
Total Units to be Sold:
Bug-gone:
Aphid-eliminator:
Slug-less:
C. How might Carey Enterprises reduce its break-even point?
Bug-gone Aphid-eliminator Slug-less Price per canister $13 $17 $19 Variable costs per canister 6 12 12Explanation / Answer
A. The ratio of each of the Three are :
Bug-gone = 3/10, Aphid eliminator = 4/10 and Slugless = 3/10
Let us assume "X" number of units should be sold to break even ,
We frame the equation
3X/10 *(13-6) + 4X/10*(17-12) + 3X/10*(19-12) - 291,000 =0
3X/10 * 7 + 4X/10*5 + 3X/10 *7 - 291,000 =0
21X/10 + 20X/10 + 21X/10 -291,000 =0
21X+20X +21X -2,910,000/10 =0
21X+20X +21X -2,910,000 =0
X = 46,935.48 Units
X= 46,936 Units (Rounded)
Calculate the total number of bottles that must be sold for the company to break even = 46,936 Units
B . The number of Units of Bug-gone = 3/10 *46,936 = 14,081 Units
The number of Aphid-eliminator = 4/10 * 46,936 = 18,774 Units
The number of Slug-less = 3/10 *46,936 = 14,081 Units
C. Cary migh reduce break-even point by:
a. Redcing Fixed Costs
b. Reducing Variable costs
c. Increasing the price of Each pesticide