1. Tress Enterprises manufactures shampoo and conditioner.
Last year, Tress sold 120,000 bottles of product. Unit sales of conditioner amounted to 60% of the number of units of shampoo.
This trend is expected to continue. The selling price for both products is $12.00; however, the variable cost of a unit of shampoo is $6.00, while the variable cost of a unit of conditioner is $8.00. Fixed costs are expected to be $420,000.
a. Compute the number of each product sold.
b. Compute the weighted-average contribution margin per unit.
c. Compute the overall break-even point in units.
d. Compute the unit sales of shampoo and conditioner at the break-even point.
e. Compute the dollar sales of shampoo and conditioner at the break-even point.
2. Hoctor Industries wishes to determine the profitability of its products and asks the cost accountant to make a comparative analysis of sales, cost of sales, and distribution costs of each
product for the year. The accountant gathers the following information, which will be useful in preparing the analysis:
Number of units sold 500,000 350,000
Number of orders received 15,000 4,000
Selling price per unit $10 $20
Cost per unit $ 4 $12
Advertising expenses total $100,000, with 60% being expended to advertise the Deluxe model. The representatives’ commissions are 5% and 7% for the standard and deluxe models,
respectively. The sales manager’s salary of $50,000 is allocated evenly between products. Other miscellaneous selling costs are estimated to be $6 per order received.
a. Compute the selling cost per unit.
b. Prepare an analysis for Hoctor Industries that shows in comparative form the income derived from the sale of each unit for the year