Sprint Manufacturing Company produces two products, X and Y. The following information is presented for both products:

X

Y

Selling price per unit

$30

$20

Variable cost per unit

20

5

Total fixed costs are $292,500.

Required:

a. Calculate the contribution margin for each product.

b. Calculate breakeven point in units of both X and Y if the sales mix is 3 units of X for every unit of Y.

c. Calculate breakeven volume in total dollars if the sales mix is 2 units of X for every 3 units of Y.

**Problem 3**

Rachel’s Pet Supply Corporation manufactures two models of grooming stations, a standard and a deluxe model. The following activity and cost information has been compiled:

Product

Standard

Deluxe

Overhead costs

Number of

Setups

3

7

Number of

Components

30

50

$40,000

Number of

Direct Labor Hours

650

150

$120,000

Assume a traditional costing system applies the $160,000 of overhead costs based on direct labor hours.

a. What is the total amount of overhead costs assigned to the standard model?

b. What is the total amount of overhead costs assigned to the deluxe model?

Assume an activity-based costing system is used and that the number of setups and the number of components are identified as the activity-cost drivers for overhead.

c. What is the total amount of overhead costs assigned to the standard model?

d. What is the total amount of overhead costs assigned to the deluxe model?