2. On-the-Go, Inc., produces two models of traveling cases for laptop computers: the Programmer and the...

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Accounting

2. On-the-Go, Inc., produces two models of traveling cases forlaptop computers: the Programmer and the Executive. The bags havethe following characteristics:
Programmer
Executive
Selling price per bag
$
60
$
100
Variable cost per bag
$
20
$
50
Expected sales (bags) per year
8,000
12,000
The total fixed costs per year for the company are $678,000.
Required:
a. What is the anticipated level of profits forthe expected sales volumes?
b. Assuming that the product mix is the same atthe break-even point, compute the break-even point. (Roundyour final answer up to the nearest whole unit.)
c. If the product sales mix were to change tonine Programmer-style bags for each Executive-style bag, what wouldbe the new break-even volume for On-the-Go? (Round yourfinal answer up to the nearest whole unit.)

Answer & Explanation Solved by verified expert

3.8 Ratings (671 Votes)

a Calculation of anticipated level of profits for the expected sales volumes Programmer Executive Total Expected sales bags per year 8000 Bags 12000 Bags a Sales 480000 8000 bags x 60 1200000 12000 bags x 100 1680000 b Variable Cost 160000 8000 bags x 20 600000 12000 bags x 50 760000 c Contribution Margin a b 320000 600000 920000 d Fixed Cost 678000 Net Profit c d 242000 Therefore from the above table anticipated net profit for the expected sales volume 242000 b Computation of the BreakEven Point assuming the product mix is the same at the breakeven point A MultiProduct company like On the Go Inc can caluclate Break Even Point by using below formula Break Even Point Total Fixed Cost Total Weighted Average Contribution Margin per unit In the Question it is give that Fixed Cost per Year 678000 From the above formula we can say that Knowing the weightedaverage See Answer

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	Programmer		Executive
Selling price per bag	$	60	$	100
Variable cost per bag	$	20	$	50
Expected sales (bags) per year		8,000		12,000