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Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings. Type of Bookshelf Sales Price per Unit Variable Cost per Unit Basic $5.00 $1.75 Deluxe 9.00 8.10 The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called "Combined," the unit contribution margin for the Combined product would be $2.31. Fixed costs for the upcoming year are estimated at $334,950. Recall that the totals of all the sales mix percents must be 100%. Determine the amounts to complete the following

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jepessoa

Answer:

The requirements are missing, so I looked for similar questions:

  • Percent of Sales Mix =
  • Break-Even Sales in Units =
  • Break-Even Sales in Dollars =

Type of Bookshelf             Sales Price       Variable Cost      Contribution M.

Basic                                         $5.00            $1.75                      $3.25

Deluxe                                      $9.00            $8.10                      $0.90

combined contribution margin = $2.31

total fixed costs $334,950

break even point in units = $334,950 / $2.31 = 149,329 units

3.25b + 0.9d = 2.31

I will first try a 50/50 sales mix

(3.25 x 0.5) + (0.9 x 0.5) = 2.075 ⇒ b must be higher

(3.25 x 0.6) + (0.9 x 0.4) = 2.31 ✓

sales mix:

basic = 60% of sales

deluxe = 40% of sales

total = 100%

break-even sales in units =

basic (60% of sales) = 89,598 units

deluxe (40% of sales) = 59,731 units

total = 149,329 units

break-even sales in dollars =

basic 89,598 units x $5 = $447,990

deluxe 59,731 units x $9 = $537,579

total = $985,569

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