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Woodland Wearables produces two models of a smart watch, the Basic and the Flash. The watches have the following characteristics:
Basic Flash
Selling price per watch $ 320 $ 485
Variable cost per watch $ 240 $ 245
Expected sales (watches) per year 36,000 12,000
The total fixed costs per year for the company are $1,507,200.
Required:
- What is the anticipated level of profits for the expected sales volumes?
- Anticipated Profit?
- Assuming that the product mix is the same at the break-even point, compute the break-even point in units.
- Break-even point?
- If the product sales mix were to change to nine Basic watches for each Flash watch, what would be the new break-even volume for Woodland Wearables?
- Break-even point?
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