SOLUTION: Can someone please help me with this problem:
The company's total fixed costs are expected to be $280,000.Based on the information, what is the combined number of units of the t
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The company's total fixed costs are expected to be $280,000.Based on the information, what is the combined number of units of the t
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Question 174211: Can someone please help me with this problem:
The company's total fixed costs are expected to be $280,000.Based on the information, what is the combined number of units of the two products that would be required to breakeven (round your answer to the nearest whole unit)
Unit selling price: Canister Bag = $250 ; Tote Bag = $120
Unit variable cost: Canister Bag = $110 ; Tote Bag = $80
Number of units produced and sold: Canister Bag = 6,000 ; Tote Bag = 4,000
a. 1,556 units
b. 2,714 units
c. 2,800 units
d. None of the above Answer by Mathtut(3670) (Show Source):
You can put this solution on YOUR website! Unit selling price: Canister Bag = $250 ; Tote Bag = $120
Unit variable cost: Canister Bag = $110 ; Tote Bag = $80
Number of units produced and sold: Canister Bag = 6,000 ; Tote Bag = 4,000
:
sales-v.costs=contribution margin
:
cm-fixed costs=zero for breakeven
:
cm-280000=0
:
cm=280000
let x and y be the number of units of the canister and tote bags respectively
:
sales-v.costs=contribution margin(cm)
:
250x-110x+120y-80y=280000
:
140x+40y=280000.....eq 1
:
ratio of --->6000y=4000x--->y=4000x/6000=2x/3....eq 2
:
take y's value eq 2 and plug it into eq 1
:
140x+40(2x/3)=280000
:
140x+80x/3=280000
:
420x+80x=840000
:
500x=840000
:
:
so total units to break even is 1680+1120=2800 units
:
answer is C
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