Problem 1: Crabtree Inc. produces two types of products -Ã? Gizmos and Gadgets. The following information is available related to each product:
Gizmos Gadgets
Sales price per unit $80 $50
Variable costs per unit 36 22
Three-fourths of the products sold are Gizmos and one-fourth are Gadgets. If total fixed costs are $50,000, how many total units need to be sold in order for the company to break even?
Problem 2. Collegiate Products produces and sells padded stadium seats emblazoned with a university logo. The company has the capacity to produce as many as 6,000 seats per month but consistently averages much less. When 4,500 seats are produced, each seat has $5 of variable costs and $2 of fixed overhead costs allocated to it. The seats typically sell for $25 each. The company has been approached by a small college who wishes to purchase 500 seats for special alumni at a price of $5 per seat. If the special order were accepted, net income would: