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Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher
Edition 3ISBN: 0073527114Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher
Edition 3ISBN: 0073527114Extensions of the CVP Model—Multiple Products
On-the-Go, Inc., produces two models of traveling cases for laptop computers: the Programmer and the Executive. The bags have the following characteristics:
| ?Programmer | ?Executive |
Selling price per bag | $70 | $100 |
Variable cost per bag | $30 | $40 |
Expected sales (bags) per year. | 8,000 | 12,000 |
The total fixed costs per year for the company are $819,000.
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.
c. If the product sales mix were to change to nine Programmer-style bags for each Executive- style bag, what would be the new break-even volume for On-the-Go?
Verified
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Cost-Volume-Analysis: - Cost-Volume-Profit (CVP) Analysis is one of the important analysis in today’s corporate world. Manger required to fix price of its product, Break-even point of its product. With the help of Cost-Volume-Analysis we can derive cost, price, Break-even point of company’s product. Manager take important decision on the basis of this analysis.
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