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Question 4d
Formulae & tables
Cardio Co manufactures three types of fitness equipment: treadmills (T), cross trainers (C) and rowing machines (R).
The budgeted sales prices and volumes for the next year are as follows:
The standard cost card for each product is shown below.
T | C | R | |
---|---|---|---|
Selling price | $1,600 | $1,800 | $1,400 |
Units | 420 | 400 | 380 |
T | C | R | |
---|---|---|---|
$ | $ | $ | |
Material | 430 | 500 | 360 |
Labour | 220 | 240 | 190 |
Variable overheads | 110 | 120 | 95 |
Labour costs are 60% fixed and 40% variable. General fixed overheads excluding any fixed labour costs are expected to be $55,000 for the next year.
Required:
(d) Explain what would happen to the breakeven point if the products were sold in order of the most profitable products first.
Note: You are NOT required to demonstrate this on the graph drawn in part (c). (2 marks)