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
|
$ 90
|
|
Variable cost per bag
|
$ 30
|
$ 30
|
|
Expected sales (bags) per year
|
7,000
|
10.500
|
The total fixed costs per year for the company are $664,000.
Required:
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?