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Cost Analysis for Standard and Chrome Sales

Calculate breakeven sales for standard and chrome products based on given prices, variable expenses, and fixed expenses. Explore different scenarios for reaching target profits.

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Cost Analysis for Standard and Chrome Sales

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  1. Exercise 7-51 Facts given: Standard Chrome Sales Price $ 65 $ 75 VE per unit $ 50$ 55 CM per unit $ 15 $ 20 Total Fixed Expenses = $ 15,300 Sales Mix is 3 standard sales for every 2 chrome sales (3/5 and 2/5) What is the BE in sales for each product?

  2. Exercise 7-51 Standard Chrome Sales Price $ 65 $ 75 VE per unit $ 50$ 55 CM per unit $ 15 $ 20 x Sales Mix x 3/5x 2/5 WACM per unit 9 + 8 = $17 BE in Units = Fixed Exp / WACM per unit BE in Units = $ 15,300/$ 17 = 900 units (total) Per Product: Standard: 900 units x 3/5 = 540 units Chrome: 900 units x 2/5 = 360 units

  3. Exercise 7-51 How many units would the company need to sell to earn $9,350? TP in Units = Fixed Exp + TP / WACM per unit TP in Units = $ 15,300 + 9,350 /$ 17 = 1,450 units (total) Per Product: Standard: 1,450 units x 3/5 = 870 units Chrome: 1,450 units x 2/5 = 580 units

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