PROBLEM 4-28 Sales Mix; Commission Structure: Multiproduct Break-Even Analysis (109) Carhex, Inc., produces cutlery sets out of high-quality wood and steel. The company makes a stan dard cutlery set and a deluxe set and sells them to retail department stores throughout the country The standard set sells for $60, and the deluxe set sells for $75. The variable expenses associated with each set are given below. Standard Deluxe $15.00 $9.00 $30.00 $11.25 Production costs Sales commissions (15% of sales price). The company's fixed expenses each month are: Advertising Depreciation Administrative $105,000 $21,700 $63,000 Salespersons are paid on a commission basis to encourage them to be aggressive in their sales efforts, Mary Parsons, the financial vice president, watches sales commissions carefully and has noted that they have risen steadily over the last year. For this reason, she was shocked to find that even though sales have increased, profits for the current month-May are down substantially from April. Sales, in sets, for the last two months are given below: Standard Deluxe Total April May 4,000 1,000 2,000 5,000 6,000 6,000 PROBLEM 4-28 Sales Mix; Commission Structure: Multiproduct Break-Even Analysis (109) Carhex, Inc., produces cutlery sets out of high-quality wood and steel. The company makes a stan dard cutlery set and a deluxe set and sells them to retail department stores throughout the country The standard set sells for $60, and the deluxe set sells for $75. The variable expenses associated with each set are given below. Standard Deluxe $15.00 $9.00 $30.00 $11.25 Production costs Sales commissions (15% of sales price). The company's fixed expenses each month are: Advertising Depreciation Administrative $105,000 $21,700 $63,000 Salespersons are paid on a commission basis to encourage them to be aggressive in their sales efforts, Mary Parsons, the financial vice president, watches sales commissions carefully and has noted that they have risen steadily over the last year. For this reason, she was shocked to find that even though sales have increased, profits for the current month-May are down substantially from April. Sales, in sets, for the last two months are given below: Standard Deluxe Total April May 4,000 1,000 2,000 5,000 6,000 6,000
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
