Crocus Company has created a new type of bicyle for active senior citizens. It comes in two models?the Gold and the Silver. Cost and production data are as follows:

Required:

1. Calculate the break-even point in units for the Gold model, assuming the allocations of fixed costs given above.

2. Total unit sales are budgeted at 10,000 units, the allocated fixed overhead amounts are as given, and the Gold model is expected to account for 70% of unit sales and the Silver model 30%. Calculate the break-even sales level in dollars for the products combined.

3. What is the break-even sales level in dollars for the combined products if the fixed overhead is allocated equally to the two models? How will the break-even sales change if the sales mix changes to 50:50 instead of 70:30? Explain your response.

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Gold Silver $ 549.99 $ 629.99 Selling price Cost to produce 5,000 units of each model: Direct materials $700,000 $500,000 Direct labour 175,000 175,000 Variable overhead 600,000 500,000 Fixed overhead allocation 755,000 500,000 Selling and administrative costs: Shipping costs per unit 2$ 10.99 10.99 200,000 Advertising budget allocated 150,000