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Chelonia Ltd manufactures small robot toys. It plans to introduce two products, Speedie and Spunkie. It is anticipated that the product mix will be 40% Speedie and 60% Spunkie. One unit of Speedie will be sold for $100, with variable cost equals $40. For a unit of Spunkie, the selling price will be $120 and the variable cost is $70. The fixed cost for producing the two products is $108 000.
a. What is the break-even point in units for each product?
b. The company plans to include a safety margin of $20 000 before tax. Assuming a tax rate of 30%, what should be the budgeted sales in units?
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