On-the-Go, Inc., produces two models of traveling cases for laptop computers: the Programmer and the Executive. The bags have the following characteristics:
|
Programmer |
Executive |
| Selling price per bag |
$ |
70 |
|
$ |
100 |
|
| Variable cost per bag |
$ |
30 |
|
$ |
40 |
|
| Expected sales (bags) per year |
|
8,000 |
|
|
12,000 |
|
|
The total fixed costs per year for the company are $819,000.
| (a) |
What is the anticipated level of profits for the expected sales volumes?
| (b) |
Assuming that the product mix is the same at the break-even point, compute the break-even point.
|
| (c) |
If the product sales mix were to change to nine Programmer-style bags for each Executive-style bag, what would be the new break-even volume for On-the-Go?
|
|