Franklin Inc. manufactures $2$ types of lamps. The company is budgeting for the upcoming year that they will likely sell $60,000$ luxury lamps, and $140,000$ units of the basic lamp. The company operates in a facility that combines both the manufacturing plant in the back of the building and the head office in the front of the building. They estimate that the manufacturing plant takes up $70\%$ of the space of the facility and the head office the other $30\%.$ The company estimates that total fixed costs for manufacturing overhead and other fixed administrative costs to be $$4,000,000$ for the year $($excluding fixed selling cost$).$

The cost structure of the two lamps is as follows:

Luxury:

Selling Price: $$150$

Variable Cost per unit: $$90$

Selling Commission per unit: $$10$

Fixed selling costs $($total$)$ $$900,000$

Units of Sales: $60,000$

Basic:

Selling Price per unit: $$90$

Variable cost per unit: $$50$

Selling commission per unit: $$5$

Fixed selling costs $($total$)$: $$235,000$

Units of Sales: $140,000$

$$ 

 

Required:

Based on the information, determine the break even number of units of each product that Franklin needs to sell to cover their costs. 

Answer rating: 100% (QA)

To determine the breakeven number of units for each product we need to consider the total fixed cost... View the full answer