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The Stackpole Company retails two products: a standard and a deluxe version of a luggage...

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Accounting

The Stackpole Company retails two products: a standard and a deluxe version of a luggage carrier. The budgeted income statement for next period is as follows:

1.

Compute the breakeven point in units, assuming that the company achieves its planned sales mix.

2.

Compute the breakeven point in units (a) if only standard carriers are sold and(b) if only deluxe carriers are sold.

3.

 Suppose 250,000units are sold but only 50,000 of them are deluxe. Compute the operating income. Compute the breakeven point in units. Compare your answer with the answer to requirement 1. What is the major lesson of thisproblem?

Standard Carrier

Deluxe Carrier

Total

Units sold

187,500

62,500

250,000

Revenues at $28 and $50 per unit

$5,250,000.00

$3,125,000.00

$8,375,000.00

Variable costs at $18 and $30 per unit

3,375,000

1,875,000

5,250,000

Contribution margins at $10 and $20 per unit

$1,875,000.00

$1,250,000.00

3,125,000

Fixed costs

2,250,000

Operating income

$875,000.00

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