Hugo Inc.sells three sizes of umbrellas: small,medium,and large.The company has annual fixed costs of $390 400.For the past several years,20% of Hugo's sales have been the small and large umbrellas with the remaining 60% being the medium size.Hugo does not expect this to change in the upcoming year.
The following information is also available for each of the umbrellas:
$\begin{array}{rrr}
&\underline{\text { Small }} &\underline{ \text { Medium }} &\underline{ \text { Large} } \
\text {Sales price per unit }&8& \$ 14 & \$ 35 \
\text {Variable costs per unit}&3 & 4 & 9
\end{array}$
Required:
A. How many total umbrellas does the company need to produce and sell in order to break even?
B. How many medium umbrellas need to be sold in order to break even?
C. If Hugo experiences a higher demand of large umbrellas than it anticipated will the break-even point increase, decrease, or stay the same? Why?

Question

Hugo Inc.sells three sizes of umbrellas: small,medium,and large.The company has annual fixed costs of $390 400.For the past several years,20% of Hugo's sales have been the small and large umbrellas with the remaining 60% being the medium size.Hugo does not expect this to change in the upcoming year.
The following information is also available for each of the umbrellas:
 $\begin{array}{rrr}
&\underline{\text { Small }} &\underline{ \text { Medium }} &\underline{ \text { Large} } \
\text {Sales price per unit }&8& \$ 14 & \$ 35 \
\text {Variable costs per unit}&3 & 4 & 9
\end{array}$ 
Required:
 A. How many total umbrellas does the company need to produce and sell in order to break even?
B. How many medium umbrellas need to be sold in order to break even?
C. If Hugo experiences a higher demand of large umbrellas than it anticipated will the break-even point increase, decrease, or stay the same? Why?

Quizplus · Accepted Answer

The Answer of Hugo Inc.sells three sizes of umbrellas: small,medium,and large.The company has annual fixed costs of $390 400.For the past several years,20% of Hugo's sales have been the small and large umbrellas with the remaining 60% being the medium size.Hugo does not expect this to change in the upcoming year.
The following information is also available for each of the umbrellas:
 $\begin{array}{rrr}
&\underline{\text { Small }} &\underline{ \text { Medium }} &\underline{ \text { Large} } \
\text {Sales price per unit }&8& \$ 14 & \$ 35 \
\text {Variable costs per unit}&3 & 4 & 9
\end{array}$ 
Required:
 A. How many total umbrellas does the company need to produce and sell in order to break even?
B. How many medium umbrellas need to be sold in order to break even?
C. If Hugo experiences a higher demand of large umbrellas than it anticipated will the break-even point increase, decrease, or stay the same? Why?

Hugo IncSells Three Sizes of Umbrellas: Small,medium,and Large Required: A

Hugo IncSells Three Sizes of Umbrellas: Small,medium,and Large Required:
A