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Cost-Volume-Profit with multiple Products, Sales Mix Changes, Changes in Fixed and variable Costs...

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Accounting

Cost-Volume-Profit with multiple Products, Sales Mix Changes, Changes in Fixed and variable Costs
John Woodcrafting inc. began several years ago as one-person cabinet-making operation. Employees were added as the business expanded.
Last year, sales volume totalled $850,000. Volume for the first five months of the current year totalled $600,000, and sales were expected to be 1.6 million for the entire year. Unfortunately, the cabinet business in the region where John Woodcrafting inc. is located is highly competitive. More than 200 cabinet shops are competing for the same business.
John Woodcrafting inc. currently offers two different quality grades of cabinets: Grade 1 and Grade-2, with Grade 1 being higher quality. The average unit selling prices, unit variable costs, and direct fixed costs are as follows:
\table[[,Unit Price,Unit Variable Cost,Direct Fixed Cost],[Grade 1,$3,400,$2,686,$95,000
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