Answered: What is Green Rider’s break-even point…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 58P: Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and...

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Question

Multiproduct
Green Rider makes three types of electric scooters. The company’s total fixed cost is $2,376,000,000. Selling prices, variable cost, and sales percentages for each type of scooter follow:

	Selling Price	Variable Cost	Percent of Total Unit Sales
Mod	$2,200	$1,900	30
Rad	3,700	3,000	50
X-treme	6,000	5,000	20

a. What is Green Rider’s break-even point in units and sales dollars?

	Units	Dollars
Mod	Answer	Answer
Rad	Answer	Answer
X-treme	Answer	Answer
Total	Answer	Answer

b. If the company has an after-tax income goal of $2 billion and the tax rate is 50 percent, how many units of each type of scooter must be sold for the goal to be reached at the current sales mix?

	Units	Dollars
Mod	Answer	Answer
Rad	Answer	Answer
X-treme	Answer	Answer
Total	Answer	Answer

c. Assume the sales mix shifts to 50 percent Mod, 40 percent Rad, and 10 percent X-treme. How does this change affect your answer to (a)?
Note: Do not round until you determine the number of units of each product; round number of units to the next highest whole unit in your calculations.