Please read instructions on Image 1, and please answer questions on page 2.thanks for your time! PR 21-5A Sales mix and break-even salesOBJ. 5Data related to the expected sales of laptops and tablets for Tech Products Inc. for thecurrent year, which is typical of recent years, are as follows:ProductsLaptopsUnit Selling Price$1,600850TabletsThe estimated fixed costs for the current year are $2,498,600.Unit Variable Cost$800350Sales Mix40%60%Instructions1. Determine the estimated units of sales of the overall (total) product, E, necessary toreach the break-even point for the current year.3.2. Based on the break-even sales (units) in part (1), determine the unit sales of bothlaptops and tablets for the current year.Assume that the sales mix was 50% laptops and 50% tablets. Compare thebreak-even point with that in part (1). Why is it so different? Problem 21-5AQuestion 1Unit Selling PriceUnit Variable CostUnit Contribution MarginBreak-even Sales (Units)Question 2Question 3Unit Selling PriceUnit Variable CostUnit Contribution MarginBreak-even Sales (Units)|||||units of laptopsunits of tablets10units of laptopsunits of tablets

Answered: PR 21-5A Sales mix and break-even sales…

Accounting (Text Only)

26th Edition

ISBN:9781285743615

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter21: Cost Behavior And Cost-volume-profit Analysis

Section: Chapter Questions

Problem 21.17EX

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Break-even analysis Somerset Inc. has finished a new video game, Snowboard Challenge. Management is now considering its marketing strategies. The following information is available: Anticipated vales price per unit................ 80 Variable cost per unit......................... 35 Anticipated volume........................... 1,000,000 units Production costs.............................. 20,000,000 Anticipated advertising........................ 15,000,000 Two managers, James Hamilton and Thomas Seymour, had the following discussion of ways to increase the profitability of this new offering: James: I think we need to think of some way to increase our profitability. Do you have any ideas? Thomas: Well. I think the best strategy would be to become aggressive on price. James: How aggressive? James: lf we drop the price to 60 per unit and maintain our advertising budget at 15,000,000. I think we will generate total sales of 2,000,000 units. James: I think that's the wrong way to go. You're giving up too much on price. Instead, I think we need to follow an aggressive advertising strategy. Thomas: How aggressive? James: If we increase our advertising to a total of 25,000,000, we should be able to increase sales volume to 1,400,000 units without any change in price. Thomas: l dont think that's reasonable. We'll never cover the increased advertising costs. Which strategy is best: Do nothing, follow the advice of Thomas Seymour, orb follow James Hamilton's strategy?
Break-even analysis Somerset Inc. has finished a new video game, Snowboard Challenge. Management is now considering its marketing strategies. The following information is available: Anticipated sales price per unit 80 Variable cost per unit 35 Anticipated volume 1,000,000 units Production costs 20,000,000 Anticipated advertising 15,000,000 The cost of the video game, packaging, and copying costs. Two managers, James Hamilton and Thomas Seymour, had the following discussion of ways to increase the profitability of this new offering: James: I think we need to think of some way to increase our profitability Do you have any ideas? Thomas: Well, I think the best strategy would be to become aggressive on price. James: How aggressive? Thomas: If we drop the price to 60 per unit and maintain our advertising budget at 15,000,000, I think we will generate total sales of 2.000,000 units. James: I think thats the wrong way to go. Youre giving too much up on price. Instead, I think we need to follow an aggressive advertising strategy Thomas: How aggressive? James: If we increase our advertising to a total of 25,000,000, we should be able to increase sales volume to 1,400.000 units without any change in price. Thomas: I dont think thats reasonable. Well never cover the increased advertising costs. Which strategy is best: Do nothing? Follow the advice of Thomas Seymour? Or follow James Hamiltons strategy?

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