1. TenAlpina is adding a new product line, which will add some new revenues and...
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TenAlpina is adding a new product line, which will add some new revenues and costs. Based on Guilias estimates, and assuming that the volumes for piton production and sales do not change, how many wall hammers would TenAlpina Tools have to sell in order the same annual gross margin in dollars as it would have if only piton were sold? That is at what demand level for hammers would Guilia be indifferent from a total profitability point of view as to whether or not to add the new product line? Hint: You need to identify the incremental relevant revenues and costs for the hammer, and then compute the breakeven point only for hammers. Table Volume Revenue $ Materials $ Direct Labor $ Factory Overhead Supplies $ Power $ Depreciation $ Occupancy $ Total Manufacturing costs $ Gross Margin $ Data is for new product line.
TenAlpina is adding a new product line, which will add some new revenues and costs. Based on Guilias estimates, and assuming that the volumes for piton production and sales do not change, how many wall hammers would TenAlpina Tools have to sell in order the same annual gross margin in dollars as it would have if only piton were sold? That is at what demand level for hammers would Guilia be indifferent from a total profitability point of view as to whether or not to add the new product line? Hint: You need to identify the incremental relevant revenues and costs for the hammer, and then compute the breakeven point only for hammers.
Table
Volume
Revenue
$
Materials
$
Direct Labor
$
Factory Overhead
Supplies
$
Power
$
Depreciation
$
Occupancy
$
Total Manufacturing costs
$
Gross Margin
$
Data is for new product line.
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