Congratulations! You have been hired as a Cost Accountant by Sundial, Inc., which produces sunglasses. Your duties include developing cost standards for materials and labor, designing and implementing cost accounting systems, defining various product and operational costs, analyzing production costs and recommending changes. When the trial period is over, you will have a performance review to demonstrate the completed tasks and gained knowledge.

There are two models of sunglasses in Sundial’s assortment — Essenz and CoolBe. The sunglasses have the following characteristics:

	Essenz	CoolBe
Selling price per unit	$160	$160
Variable cost per unit	$60	$80
Expected units sold per year	60,000	40,000

The total fixed costs per year for the company are $2,208,000.

• What is the anticipated level of profits for the expected sales volumes?
• Assuming that the product mix is the same at the break-even point, compute the break-even point.
• If the product sales mix were to change to four pairs of Essenz sunglasses for each pair of CoolBe sunglasses, what would be the new break-even volume for Sundial, Inc.?
• How can Sundial, Inc. boost its profits by costs cutting or increase in sales? Provide at least three recommendations that you consider the most important.

Answer rating: 100% (QA)

1 The anticipated level of profits for the expected sales volumes is 1152000 2 The breakeven point is 80000 pairs of sunglasses 3 The new breakeven vo... View the full answer