Problem
Sundial, Inc., produces two models of sunglasses: AU and NZ. The sunglasses have the following characteristics:
|
AU
|
NZ
|
|
Selling price per unit
|
$
|
420
|
|
$
|
420
|
|
|
Variable cost per unit
|
$
|
120
|
|
$
|
210
|
|
|
Expected units sold per year
|
|
40,000
|
|
|
60,000
|
|
The total fixed costs per year for the company are $11,562,000
(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 four pairs of AU sunglasses for each pair of NZ sunglasses, what would be the new break-even volume for Sundial, Inc.?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.