Q8Bikes produces two types of bicycles: Deluxe (D) and Super Deluxe (SD). Demand for the products is high for both lines. The company uses the same machinery to produce both lines. The machinery can be run for a maximum of 5000 hours per period. Q8Bikes can produce 15 D bikes per hour or 10 SD bikes per hour. Fixed costs are 55,000 KWD per period. Sales prices and variable costs are as follow: Deluxe Super Deluxe KWD 190.000 KWD 250.000 65.000 Sales price per unit Variable cost per unit Requirements 1. Which product should Q8Bikes emphasize? Why? 2. To maximize profits, how many bikes of each line should Q8Bikes produce? Answer for each alternatives a, b, and c. Alternatives are independent. 1. If for every D bike sold an SD bike is to be sold. 2. If the maximum SD bikes that could be sold per period is 45,000. 86.000 3. For maintenance purposes, only 95% of the available capacity can be used and for every SD bike sold 2 D bikes can be sold. 3. Given your answers in (2) what will the company's operating income be for each alternative?

Q8Bikes produces two types of bicycles: Deluxe (D) and Super Deluxe (SD). Demand for the products is high for both lines. The company uses the same machinery to produce both lines. The machinery can be run for a maximum of 5000 hours per period. Q8Bikes can produce 15 D bikes per hour or 10 SD bikes per hour. Fixed costs are 55,000 KWD per period. Sales prices and variable costs are as follow: Deluxe Super Deluxe KWD 190.000 KWD 250.000 65.000 Sales price per unit Variable cost per unit Requirements 1. Which product should Q8Bikes emphasize? Why? 2. To maximize profits, how many bikes of each line should Q8Bikes produce? Answer for each alternatives a, b, and c. Alternatives are independent. 1. If for every D bike sold an SD bike is to be sold. 2. If the maximum SD bikes that could be sold per period is 45,000. 86.000 3. For maintenance purposes, only 95% of the available capacity can be used and for every SD bike sold 2 D bikes can be sold. 3. Given your answers in (2) what will the company's operating income be for each alternative?

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 58P: Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and...

See similar textbooks

Similar questions

Salvadores Manufacturing builds and sells snowboards, skis and poles. The sales price and variable cost for each follows: Product Selling Priceper Unit Variable Costper Unit Snowboards $300 $160 Skis $390 $220 Poles $40 $20 Their sales mix is reflected in the ratio 8:3:2. If annual fixed costs shared by the three products are $167,000, how many units of each product will need to be sold in order for Salvadores to break even? Product Ratio (mix) Break-even percomposite unit Number of Unitsper product Snowboards 8 fill in the blank 1 fill in the blank 2 Skis 3 fill in the blank 3 fill in the blank 4 Poles 2 fill in the blank 5 fill in the blank 6
Collyer Products Inc. has a Valve Division that manufactures and sells a standard valve as follows: Capacity in units Selling price to outside customers on the intermediate market Variable costs per unit Fixed costs per unit (based on capacity) 10,000 15 8 5 The company has a Pump Division that could use this valve in the manufacture of one of its pumps. The Pump Division is currently purchasing 10,000 valves per year from an overseas supplier at a cost of $14 per valve. 3. Assume again that the Valve Division is selling all that it can produce to outside customers on the intermediate market. Also assume that $2 in variable expenses can be avoided on transfers within the company, due to reduced selling costs. What is the acceptable range, if any, for the transfer price between the two divisions? Transfer price 4. Assume the Pump Division needs 20,000 special high-pressure valves per year. The Valve Division's variable costs to manufacture and ship the special valve would be $10 per…
Holiday Corp. has two divisions, Quail and Marlin. Quail produces a widget that Marlun could use in its production. Quail's variable costs are $5.80 per widget while the full cost is $8.80. Widgets sell on the open market for $15.6 each. If Quail has excess capacity, what would be the minimum transfer price if Marlin is purchasing 190000 units on the open market? a) $5.8 b) $8.8 c) $15.6 d) $6.8
Company XYZ is an electric car manufacturer. The company produces and sells two models: Standard and Turbo. The Standard model has a selling price per unit and variable cost per unit of $8,000 and $3,000 respectively. The Turbo model has a selling price per unit and variable cost per unit of $12,000 and $5,000 respectively. The company currently has a sales mix of 2 units of Standard and 4 units of Turbo. Assuming total fixed costs of $475,000, how many units of Turbo should be sold to achieve breakeven? O a. 60 О Б. 30 O c. None of the given answers O d. 50 О е. 25
Company XYZ is an electric car manufacturer. The company produces and sells two models: Standard and Turbo. The Standard model has a selling price per unit and variable cost per unit of $8,000 and $3,000 respectively. The Turbo model has a selling price per unit and variable cost per unit of $12,000 and $5,000 respectively. The company currently has a sales mix of 2 units of Standard and 4 units of Turbo. Assuming total fixed costs of $475,000, how many units of Turbo should be sold to achieve breakeven? O a. 30 O b. 25 O. 50 O d. 60 O e. None of the given answers
Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $5.20 per switch. Vista 's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Machine A Machine B Annual fixed costs $ 582, 450 $ 792, 100 Variable cost per switch 1.67 0.75 Required: 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 230,000 switches per year and what is the total cost of that alternative?
Holiday Corp. has two divisions, Quail and Marlin. Quail produces a widget that Marlin could use in its production. Quail's variable costs are $4.10 per widget while the full cost is $7.10. Widgets sell on the open market for $12.20 each. If Quail has excess capacity, what would be the cost savings if the transfer were made and Marlin currently is purchasing 105,000 units on the open market? Multiple Choice $0 $745,500 $850,500 $1,281,000
MultiproductGreen Rider makes three types of electric scooters. The company’s total fixed cost is $2,376,000,000. Selling prices, variable cost, and sales percentages for each type of scooter follow: Selling Price Variable Cost Percent of Total Unit Sales Mod $2,200 $1,900 30 Rad 3,700 3,000 50 X-treme 6,000 5,000 20 a. What is Green Rider’s break-even point in units and sales dollars? Units Dollars Mod Answer Answer Rad Answer Answer X-treme Answer Answer Total Answer Answer b. If the company has an after-tax income goal of $2 billion and the tax rate is 50 percent, how many units of each type of scooter must be sold for the goal to be reached at the current sales mix? Units Dollars Mod Answer Answer Rad Answer Answer X-treme Answer Answer Total Answer Answer c. Assume the sales mix shifts to 50 percent Mod, 40 percent Rad, and 10 percent X-treme. How does this change affect your…
MultiproductGreen Rider makes three types of electric scooters. The company’s total fixed cost is $1,080,000,000. Selling prices, variable cost, and sales percentages for each type of scooter follow: Selling Price Variable Cost Percent of Total Unit Sales Mod $2,200 $1,900 30 Rad 3,700 3,000 50 X-treme 6,000 5,000 20 a. What is Green Rider’s break-even point in units and sales dollars? Units Dollars Mod Rad X-treme Total b. If the company has an after-tax income goal of $1 billion and the tax rate is 50 percent, how many units of each type of scooter must be sold for the goal to be reached at the current sales mix? Units Dollars Mod Rad X-treme Total c. Assume the sales mix shifts to 50 percent Mod, 40 percent Rad, and 10 percent X-treme. How does this change affect your answer to (a)?Note: Do not round until you determine the number of units of each product; round…
Georgeland Cycles makes and sells two models of electric bicycles. The Commuter (a folding model) sells for $2,509.00 and the Tour- X (a fat-tire trail model) sells for $4,509.00. Unit variable costs for the Commuter are $1,759.00 and for the Tour-X $3,209.00. Annual fixed costs at Georgeland are $556,150. The marketing manager estimates that the annual mix of sales is 30 percent Commuter model and 70 percent Touring model. Required: a. How many of each model ebike must Georgeland Cycles sell every year to break even? b. How many of each model ebike must Georgeland Cycles sell every year to earn operating profits of $102,150 before taxes?
MultiproductGreen Rider makes three types of electric scooters. The company’s total fixed cost is $2,376,000,000. Selling prices, variable cost, and sales percentages for each type of scooter follow: Selling Price Variable Cost Percent of Total Unit Sales Mod $2,200 $1,900 30 Rad 3,700 3,000 50 X-treme 6,000 5,000 20 A. If the company has an after-tax income goal of $2 billion and the tax rate is 50 percent, how many units of each type of scooter must be sold for the goal to be reached at the current sales mix? Units Dollars Mod Answer Answer Rad Answer Answer X-treme Answer Answer Total Answer Answer
Chelonia Ltd manufactures small robot toys. It plans to introduce two products, Speedie and Spunkie. It is anticipated that the product mix will be 40% Speedie and 60% Spunkie. One unit of Speedie will be sold for $100, with variable cost equals $40. For a unit of Spunkie, the selling price will be $120 and the variable cost is $70. The fixed cost for producing the two products is $108 000.a. What is the break-even point in units for each product? b. The company plans to include a safety margin of $20 000 before tax. Assuming a tax rate of 30%, what should be the budgeted sales in units?