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What is the break-even sales volume

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Question - Thomlinson Company is considering the development of two products: no. 65 or no. 66. Manufacturing cost information follows.

Annual fixed Cost product number 65:$220,000

Variable cost per unit product number 65: 33

Annual fixed cost product number 66: $340,000

Variable cost per unit product number 66: 25

Regardless of which product is introduced, the anticipated selling price will be $50 and the company will pay a 10% sales commission on gross dollar sales. Thomlinson will not carry an inventory of these items.

Required:

A. What is the break-even sales volume (in dollars) on product no. 66?

B. Which of the two products will be more profitable at a sales level of 25,000 units?

C. At what unit-volume level will the profit/loss on product no. 65 equal the profit/loss on product no. 66?

Jettson adds a 25% profit margin to all jobs, computed on the basis of total cost. In this client's case the profit margin amounted to $118,000 ($472,000 × 25%), producing a bid price of $590,000. Assume that 60% of construction overhead is fixed.

Reference no: EM132091122

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