Bleeker Street Company produces and sells two lines of business suits,the Contemporary and the Traditionalist.The following monthly data are provided:
$$\begin{array} { l c c }
& \text { Contemporary } & \text { Traditionalist } \
\text { Estimated unit sales per month } & 500 & 1,000 \
\text { Selling price } & \$ 200 & \$ 175 \
\text { Variable marnufacturing costs } & 110 & 100 \
\text { Variable selling and adrninistrative costs } & 10 & 10
\end{array}$$ Budgeted net income is $45,000 per month.
Required:
1)Calculate the monthly break-even sales in units and dollars based on the budgeted sales mix.
2)Calculate the firm's overall margin of safety in dollars.
3)Compute the firm's profit assuming 1,500 units are sold in a 1:1 sales mix.
4)Explain any difference between the firm's budgeted net income of $35,000 and your answer to Requirement 3.

Question

Bleeker Street Company produces and sells two lines of business suits,the Contemporary and the Traditionalist.The following monthly data are provided:
 $$\begin{array} { l c c } 
& \text { Contemporary } & \text { Traditionalist } \
\text { Estimated unit sales per month } & 500 & 1,000 \
\text { Selling price } & \$ 200 & \$ 175 \
\text { Variable marnufacturing costs } & 110 & 100 \
\text { Variable selling and adrninistrative costs } & 10 & 10
\end{array}$$ Budgeted net income is $45,000 per month.
Required:
1)Calculate the monthly break-even sales in units and dollars based on the budgeted sales mix.
2)Calculate the firm's overall margin of safety in dollars.
3)Compute the firm's profit assuming 1,500 units are sold in a 1:1 sales mix.
4)Explain any difference between the firm's budgeted net income of $35,000 and your answer to Requirement 3.

Quizplus · Accepted Answer

The Answer of Bleeker Street Company produces and sells two lines of business suits,the Contemporary and the Traditionalist.The following monthly data are provided:
 $$\begin{array} { l c c } 
& \text { Contemporary } & \text { Traditionalist } \
\text { Estimated unit sales per month } & 500 & 1,000 \
\text { Selling price } & \$ 200 & \$ 175 \
\text { Variable marnufacturing costs } & 110 & 100 \
\text { Variable selling and adrninistrative costs } & 10 & 10
\end{array}$$ Budgeted net income is $45,000 per month.
Required:
1)Calculate the monthly break-even sales in units and dollars based on the budgeted sales mix.
2)Calculate the firm's overall margin of safety in dollars.
3)Compute the firm's profit assuming 1,500 units are sold in a 1:1 sales mix.
4)Explain any difference between the firm's budgeted net income of $35,000 and your answer to Requirement 3.

Bleeker Street Company Produces and Sells Two Lines of Business