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PROBLEM 4-28 Sales Mix; Commission Structure: Multiproduct Break-Even Analysis (109) Carhex, Inc., produces cutlery sets out of high-quality wood and steel. The company makes a stan dard cutlery set and a deluxe set and sells them to retail department stores throughout the country The standard set sells for $60, and the deluxe set sells for $75. The variable expenses associated with each set are given below. Standard Deluxe $15.00 $9.00 $30.00 $11.25 Production costs Sales commissions (15% of sales price). The company's fixed expenses each month are: Advertising Depreciation Administrative $105,000 $21,700 $63,000 Salespersons are paid on a commission basis to encourage them to be aggressive in their sales efforts, Mary Parsons, the financial vice president, watches sales commissions carefully and has noted that they have risen steadily over the last year. For this reason, she was shocked to find that even though sales have increased, profits for the current month-May are down substantially from April. Sales, in sets, for the last two months are given below: Standard Deluxe Total April May 4,000 1,000 2,000 5,000 6,000 6,000 PROBLEM 4-28 Sales Mix; Commission Structure: Multiproduct Break-Even Analysis (109) Carhex, Inc., produces cutlery sets out of high-quality wood and steel. The company makes a stan dard cutlery set and a deluxe set and sells them to retail department stores throughout the country The standard set sells for $60, and the deluxe set sells for $75. The variable expenses associated with each set are given below. Standard Deluxe $15.00 $9.00 $30.00 $11.25 Production costs Sales commissions (15% of sales price). The company's fixed expenses each month are: Advertising Depreciation Administrative $105,000 $21,700 $63,000 Salespersons are paid on a commission basis to encourage them to be aggressive in their sales efforts, Mary Parsons, the financial vice president, watches sales commissions carefully and has noted that they have risen steadily over the last year. For this reason, she was shocked to find that even though sales have increased, profits for the current month-May are down substantially from April. Sales, in sets, for the last two months are given below: Standard Deluxe Total April May 4,000 1,000 2,000 5,000 6,000 6,000

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