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Woodland Wearables produces two models of a smart watch, the Basic and the Flash. The...

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Accounting

Woodland Wearables produces two models of a smart watch, the Basic and the Flash. The watches have the following characteristics:

Basic Flash
Selling price per watch $ 400 $ 525
Variable cost per watch $ 320 $ 285
Expected sales (watches) per year 60,000 20,000

The total fixed costs per year for the company are $1,584,000.

Required:

a. What is the anticipated level of profits for the expected sales volumes?

b. Assuming that the product mix is the same at the break-even point, compute the break-even point in units.

c. If the product sales mix were to change to nine Basic watches for each Flash watch, what would be the new break-even volume for Woodland Wearables?

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