Pawsome Playthings are a business that makes dog toys. The business has provided the following information:Product Sales Price Variable Cost Sales mixSqueaky Plush Toys 15 10.50 15Tug Rope Toys 10 5.00 10Treat-Dispensing Toys 30 12.00 7Fixed costs are $6,700.How many items in total need to be sold to break even? Please answer in whole units
Question
Pawsome Playthings are a business that makes dog toys. The business has provided the following information:Product Sales Price Variable Cost Sales mixSqueaky Plush Toys 15 10.50 15Tug Rope Toys 10 5.00 10Treat-Dispensing Toys 30 12.00 7Fixed costs are $6,700.How many items in total need to be sold to break even? Please answer in whole units
Solution
To calculate the break-even point, we first need to calculate the weighted average contribution margin per unit for each product. The contribution margin is the sales price minus the variable cost. The weighted average takes into account the sales mix.
-
Squeaky Plush Toys: Contribution Margin = Sales Price - Variable Cost = 10.50 = 4.50 * 15 = $67.50
-
Tug Rope Toys: Contribution Margin = Sales Price - Variable Cost = 5 = 5 * 10 = $50
-
Treat-Dispensing Toys: Contribution Margin = Sales Price - Variable Cost = 12 = 18 * 7 = $126
Next, we add up the weighted contribution margins to get the total weighted average contribution margin per unit:
Total Weighted Average Contribution Margin = 50 + 243.50
Then, we divide the total fixed costs by the total weighted average contribution margin to get the break-even point in units:
Break-Even Point in Units = Total Fixed Costs / Total Weighted Average Contribution Margin = 243.50 = 27.5 units
Since we can't sell half a unit, we round up to the nearest whole unit. So, Pawsome Playthings needs to sell 28 units in total to break even.
Similar Questions
Toys-4-U manufactures a toy that it sells for $30 each. The variable cost per toy is $15 and the fixed costs for this product line are $96,000 per year. They estimate they can produce 10,240 toys per production period.a. What is the break-even point in units?Break-even point toys per yearb. What is the break-even sales revenue?Break-even sales revenue $ per yearc. What is the break-even volume as a percent of capacity? (Round your answer to 1 decimal place.)Break-even volume %d. What would their net income be if they sold 9,200 toys?Net income $ e. What level of output is required to have a net income of $24,000?Level of output toys per year
A company manufactures and sells widgets. The following information is available:• Each widget sells for $100.• The variable cost per widget is $50.• Total fixed costs per month are $300,000.How many widgets does the company need to sell each month to break even? 6,000 4,500 3,000 2,000
Our company sells a product for $120 per unit. Variable costs are $90 per unit and fixed costs are $9,000. The company expects to sell 500 units this year. How many units must we sell to break even?Group of answer choices300320360400
The accounts of Fluffy and Ruffly Pet Services show net sales of $63,000, operating expenses of $15,750, gross profit of $37,800, and profit before tax of $22,050. What was the cost of the inventory sold during the year?Group of answer choices$15,750$25,200None of the other answers$40,950$47,250Next
Jane Corporation produces model toy cars. Each sells for $25.75. Its variable cost per unit is $12.44. Assuming it has a fixed cost of $264,869. What is the breakeven point for Jane Corporation?
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.