Question: Problem 3-57 Extensions of the CVP Model-Multiple Products (LO 3-4) Sundial, Inc., produces two models of sunglasses: AU and NZ. The sunglasses have the following

Problem 3-57 Extensions of the CVP Model-Multiple Products (LO 3-4)

Sundial, Inc., produces two models of sunglasses: AU and NZ. The sunglasses have the following characteristics:

AUNZSelling price per unit$220$220Variable cost per unit$120$80Expected units sold per year60,00040,000

The total fixed costs per year for the company are $3,132,000.

Required:

a.What is the anticipated level of profits for the expected sales volumes?

b.Assuming that the product mix is the same at the break-even point, compute the break-even point.

c.If the product sales mix were to change to four pairs of AU sunglasses for each pair of NZ sunglasses, what would be the new break-even volume for Sundial, Inc.?

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