a. Yard Tools manufactures lawnmowers, weed-trimmers, and chainsaws. Its sales mix and contribution margin per unit are as follows.

Yard Tools has fixed costs of $6,146,640.
Compute the number of units of each product that Yard Tools must sell in order to break even under this product mix.

b. Fredonia Inc. had a bad year in 2013. For the first time in its history, it operated at a loss. The company€™s income statement showed the following results from selling 79,300 units of product: Net sales $1,570,140; total costs and expenses $1,730,100; and net loss $159,960. Costs and expenses consisted of the following.
Management is considering the following independent alternatives for 2014.

1. Increase unit selling price 28% with no change in costs and expenses.
2. Change the compensation of salespersons from fixed annual salaries totaling $197,300 to total salaries of $41,400 plus a 5% commission on net sales.
3. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50.
(i) Compute the break-even point in dollars for 2014.
(ii) Compute the break-even point in dollars under each of the alternative courses of action.

Which course of action do yourecommend?

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Contribution Sales Mix Margin per Unit Lawnmowers S50 20 % Weed 50 % S22 rimmers Chainsaws 30 % S50 Lawnmowers units Weed-trimmers units Chainsaws units Total Variable Fixed Cost of goods sold $1,205,600 $783,900 S421,700 Selling expenses Administrative expenses 107.400 4,500 64,900 417,100 70,500 346,600 S1,730,100 S896,900 S833,200 Break-even point l. Increase selling price s 2. Change compensation s 3. Purchase machinery S