Reference no: EM132871535

Problem 1 - Suppose that Chillmax Company now sells both pairs of shoes and fabric carryalls. The pairs of shoes are priced at $60 and have variable costs of $21 each. The carryalls are priced at $36 and have variable costs of $9 each. Total fixed cost for Chillmax as a whole equals $91,500 (includes all fixed factory overhead and fixed selling and administrative expense). Next year, Chillmax expects to sell 3,500 pairs of shoes and 875 carryalls.

Form a package of shoes and carryalls based on the sales mix expected for the coming year.

Calculate the break-even point in units for pairs of shoes and for carryalls.

Check your answer by preparing a contribution margin income statement.

Problem 2- Chillmax Company now sells both pairs of shoes and carryalls. Next year, Chillmax expects to produce total revenue of $210,000 and incur total variable cost of $81,375. Total fixed cost is expected to be $91,500.

Calculate the break-even point in sales dollars for Chillmax.

Check your answer by preparing a contribution margin income statement.