Maurice Tutor

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  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 30 Jul 2017 My Price 9.00

Milagro Co.

Milagro Co. manufactures and sells three products: product 1, product 2, and product 3. Their unit sales prices are product 1, $200; product 2, $150; and product 3, $100. The per unit variable costs to manufacture and sell these products are product 1, $150; product 2, $75; and product 3, $40. Their sales mix is reflected in a ratio of 6: 4: 2. Annual fixed costs shared by all three products are $5,400,000. One type of raw material has been used to manufacture products 1 and 2. The company has developed a new material of equal quality for less cost. The new material would reduce variable costs per unit as follows: product 1 by $50, and product 2, by $25. However, the new material requires new equipment, which will increase annual fixed costs by $200,000.

Required
1. If the company continues to use the old material, determine its break-even point in both sales units and sales dollars of each individual product.
2. If the company uses the new material, determine its new break-even point in both sales units and sales dollars of each individual product.
Analysis Component
3. What insight does this analysis offer management for long-term planning?

Answers

(5)
Status NEW Posted 30 Jul 2017 10:07 PM My Price 9.00

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