Question

suppose units are sold but only of them are deluxe. compute the operating income. compute the breakeven point in units. compare your answer with the answer to requirement 1. what is the major lesson of this​ problem?

Answer 1

Point of breakeven in units:   = 22,500 units

Why is it important to know what a break-even point is?

The point at which a business's total revenue equals its total expenses is known as the breakeven point. This translates to net zero just at the breakeven point, which means there is no profit.

According to the given information:

                                                                   Standard Deluxe Total

Units sold                                             225,000 25,000

Sales mix                                                       9 1

Contribution margin per unit                     $10     $20

Weighted average

contribution margin per unit                           $90 $20  $110

                                                             Standard  Deluxe            Total

Units sold                                      225,000 25,000

Revenues                                $5,625,000     $1,125,000

                                             (225,000*$25)     (25,000*$45)   $6,750,000

Variable costs              3,375,000                 625,000

                                       (225,000*$15)  (25,000*$25) 4,000,000

Contribution margin       2,250,000 500,000           2,750,000

Fixed costs                                                                   2,475,000

Operating income                                                           $275,000

Point of breakeven in units:   $2,475,000 / $110 = 22,500 units

Breakeven point in units is higher in requirement 1 than in requirement 3 due to standard's 9-fold higher sales mix in requirement 3 compared to standard's 4-fold higher sales mix in requirement 1.

Due to the lower per unit contribution margin for standard than deluxe, requirement 3's operating income was lower than requirement 1's.

To know more about Breakeven point visit:

brainly.com/question/15406644

#SPJ4