Cornerstone Exercise 16.5 (Algorithmic) Multiple-Product Break-Even and Target Profit

Vandenberg, Inc., produces and sells two products: a ceiling fan and a table fan. Vandenberg plans to sell 30,000 ceiling fans and 90,000 table fans in the coming year. Product price and cost information includes:

Ceiling Fan	Table Fan
Price	$50	$19
Unit variable cost	$10	$10
Direct fixed cost	$20,200	$48,000

Common fixed selling and administrative expenses total $76,000.

Required:

1. What is the sales mix estimated for next year (calculated to the lowest whole number for each product)? Sales mix of ceiling fans to table fans = :

2. Using the sales mix from Requirement 1, form a package of ceiling fans and table fans. How many ceiling fans and table fans are sold at break-even? Do not round intermediate calculations. If required, round your final answers to the nearest whole number.

Break-even ceiling fans

Break-even table fans

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3. Prepare a contribution-margin-based income statement for Vandenberg, Inc., based on the unit sales calculated in Requirement 2. If an amount is zero, enter "0". Enter any negative product margin and losses with a minus sign. Do not round intermediate calculations. Round your final answers to nearest dollar.

Vandenberg, Inc.
Contribution-Margin-Income Statement
For the Coming Year
		Ceiling Fans		Table Fans		Total
		$		$		$
		$		$		$
		$		$		$
						$

4. What if Vandenberg, Inc., wanted to earn operating income equal to $15,200? Calculate the number of ceiling fans and table fans that must be sold to earn this level of operating income. (Hint: Remember to form a package of ceiling fans and table fans based on the sales mix and to first calculate the number of packages to earn an operating income of $15,200.) Round your intermediate calculations and final answers to nearest number.

Break-even ceiling fans
Break-even table fans