European Flooring makes three types of flooring products: tile, carpet, and parquet. Cost analysis reveals the following costs (expressed on a per-square-yard basis) are expected for 2000:

Per-yard expected selling prices are as follows: tile, $16.40; carpet, $8.00; and parquet, $25.00. In 1999, sales were as follows and the mix is expected to continue in 2000:

Review of recent tax returns reveals an expected tax rate of 40 percent.
a. Calculate the break-even point for 2000.
b. How many square yards of each product are expected to be sold at the break-even point?

Transcribed Image Text:

Tile Carpet Parquet Direct material Direct labor Variable overhead Variable selling expenses Variable administrative expenses $5.20 1.80 1.00 0.50 0.20 $3.25 0.40 0.15 0.25 0.10 $8.80 6.40 1.75 2.00 0.30 Fixed overhead Fixed selling expenses Fixed administrative expenses $760,000 240,000 200,000 Tile Carpet Parquet Square yards 18,000 144,000 12,000