Good Scent, Inc., produces two colognes: Rose and Violet. Of the two, Rose is more popular. Data concerning the two products follow:

Required: 

1. Using the conventional approach, compute the number of cases of Rose and the number of cases of Violet that must be sold for the company to break even. In your computations, round variable unit cost to the nearest cent and round the number of break-even packages to the nearest whole number. 

Break-even cases of Rose ____________________ Break-even cases of Violet___________________ 

2. Using an activity-based approach, compute the number of cases of each product that must be sold for the company to break even. In your computations, round all computed amounts to the nearest cent and round the number of break-even packages to the nearest whole number. 

Break-even cases of Rose__________________ Break-even cases of Violet___________________

Transcribed Image Text:

Rose Violet Expected sales (in cases) 47,000 9,400 Selling price per case $102 $79 Direct labor hours 33,000 5,500 Machine hours 9,800 3,000 Receiving orders 48 23 Packing orders 104 52 Material cost per case $50 $41 Direct labor cost per case $9 $7 The company uses a conventional costing system and assigns overhead costs to products using direct labor hours. Annual overhead costs follow. They are classified as fixed or variable with respect to direct labor hours. Fixed Variable Direct labor benefits $ $192,500 Machine costs 219,000* 231,000 Receiving department 208,500 Packing department 106,000 Total costs $533,500 $423,500 All depreciation Rose Violet Expected sales (in cases) 47,000 9,400 Selling price per case $102 $79 Direct labor hours 33,000 5,500 Machine hours 9,800 3,000 Receiving orders 48 23 Packing orders 104 52 Material cost per case $50 $41 Direct labor cost per case $9 $7 The company uses a conventional costing system and assigns overhead costs to products using direct labor hours. Annual overhead costs follow. They are classified as fixed or variable with respect to direct labor hours. Fixed Variable Direct labor benefits $ $192,500 Machine costs 219,000* 231,000 Receiving department 208,500 Packing department 106,000 Total costs $533,500 $423,500 All depreciation

Answer rating: 100% (QA)

Break even margin The breakeven point is defined as the point where sales or revenues equal expenses There is no profit made or loss incurred at the breakeven point This figure is important for anyone ... View the full answer