Commercial Crates Pty Ltd manufactures two types of crates for transporting fresh fruit and vegetables Timber and Polystyrene. The budgeted data for next year are as follows:

Facility costs for the Plant are estirfla4€d to be $360 000.
Required:
1. Calculate the total budgeted production costs for next year for each of the two products.
2. Calculate the breakeven Point for next year for the two products, using the above budgeted production units to determine the sales mix
3. The financial controller is surprised by the high level of the break-even volumes for the two products and after discussion with the manufacturing manager has decided that the source of the problem must be the small Size of the batches for the Polystyrene crates. Recalculate the break-even point, assuming that the batch Size for the Polystyrene Crates is changed to 2000 units.
4. Management decides to produce all products in batch Sizes of 2000 units next year to save costs. Do you consider this to be a good idea? Explain why or why not

Transcribed Image Text:

Timber Polystyrene Selling price $138 $100 Direct material $ 70 $ 52 Activities: Assembling crates Packaging crates Setting up production line Inspection Moving material to production Advertising and promotion $36 per unit $36 per unit $4 per unit $90 per batch $6 per unit $80 per batch $50 per batch $50 per batch $50 000 per product $60 per batch $60 per batch $30 000 per product 100 000 Production units 50 000 Average batch size 100 400