Artistic Woodcrafting Inc. began several years ago as a one-person, cabinet-making operation. Employees were added as...

 

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Artistic Woodcrafting Inc. began several years ago as a one-person, cabinet-making operation. Employees were added as the business expanded. Last year, sales volume totaled $850,000. Volume for the first five months of the current year totaled $600,000, and sales were expected to be $1.6 million for the entire year. Unfortunately, the cabinet business in the region where Artistic is located is highly competitive. More than 200 cabinet shops are all competing for the same business. Artistic currently offers two different quality grades of cabinets: Grade I and Grade II, with Grade I being the higher quality. The average unit selling prices, unit variable costs, and direct fixed costs are as follows: Grade I Grade II Unit Price $3,400 Unit Variable Cost $2,686 Direct Fixed Cost $95,000 1,600 1,328 95,000 Common fixed costs (fixed costs not traceable to either cabinet) are $35,000. Currently, for every three Grade I cabinets sold, seven Grade II cabinets are sold. Required: 1. Calculate the number of Grade I and Grade II cabinets that are expected to be sold during the current year. 2. Calculate the number of Grade I and Grade II cabinets that must be sold for Artistic to break even. Artistic Woodcrafting Inc. began several years ago as a one-person, cabinet-making operation. Employees were added as the business expanded. Last year, sales volume totaled $850,000. Volume for the first five months of the current year totaled $600,000, and sales were expected to be $1.6 million for the entire year. Unfortunately, the cabinet business in the region where Artistic is located is highly competitive. More than 200 cabinet shops are all competing for the same business. Artistic currently offers two different quality grades of cabinets: Grade I and Grade II, with Grade I being the higher quality. The average unit selling prices, unit variable costs, and direct fixed costs are as follows: Grade I Grade II Unit Price $3,400 Unit Variable Cost $2,686 Direct Fixed Cost $95,000 1,600 1,328 95,000 Common fixed costs (fixed costs not traceable to either cabinet) are $35,000. Currently, for every three Grade I cabinets sold, seven Grade II cabinets are sold. Required: 1. Calculate the number of Grade I and Grade II cabinets that are expected to be sold during the current year. 2. Calculate the number of Grade I and Grade II cabinets that must be sold for Artistic to break even.