Reference no: EM132805469
The Stella Company produces dog leashes. The company has three lines of leashes-Luxury, Premium, and Basic- with contribution margin or $3, $2, and $1 respectively. Tara Depay foresees sales of 200,000 units in the coming period, consisting of 20,000 units of Luxury, 100,000 units of Premium, and 80,000 units of basic. The company's fixed costs for the period are $255,000.
Problem 1. What is the company's breakeven point in units, assuming that the given sales mix is maintained?
Problem 2. If the sales mix is maintained, what is the total contribution margin when 200,000 units are sold? What is the operating income?
Problem 3. What would operating income be if 20,000 units of Luxury, 80,000 units of Premium, and 100,000 units of Basic were sold? What is the new breakeven point in units if these relationships persist in the next period?
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