1.The company is considering making a deluxe model. Its price would be $156, and its...
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1.The company is considering making a deluxe model. Its price would be $156, and its VC per unit would be $100, compared to a price of $100 and a VC of $60 for the basic model. It anticipates a sales mix of 60% basic model and 40% deluxe model. How many units of the basic model and how many units of the deluxe model must the company sell to break even?
Exhibit 4
Unit Produced and Sold
Cost Category
1200
1900
Direct Material
$ 36,000.00
$ 57,000.00
Direct Labor
$ 18,000.00
$ 28,500.00
Rent
$ 5,000.00
$ 5,000.00
Depreciation
$ 4,000.00
$ 4,000.00
Electricity
$ 4,400.00
$ 5,800.00
Other Manufacturing
$ 19,600.00
$ 21,700.00
Selling
$ 8,000.00
$ 8,000.00
Sales Commision
$ 12,000.00
$ 19,000.00
Administration
$ 5,000.00
$ 5,000.00
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