05.07.2022 - 12:51

# International Print Machines sells three computer printer models: a color inkjet, a laser printer, and a color laser printer. Total usual fixed costs for IPM is $5,000,000. Information about the print Question: International Print Machines sells three computer printer models: a color inkjet, a laser printer, and a color laser printer. Total usual fixed costs for IPM is$5,000,000. Information about the printers are in the table below:

 Inkjet Laser Color Laser Totals Selling Price $250$400 $1500 Variable Cost$100 $150$800 Expected Sales 12,000 6,000 2,000 20,000 Sales Mix 60% 30% 10% 100%

a) What would be the level of profit for IPM if the expected sales actually occur?

b) How many printers of each type must IPM sell to break even?

• a) To calculate the level of profit, we need to first calculate the total revenue and total variable costs for each printer model and then add them up. For the Inkjet printer: - Total revenue = Selling price * Expected Sales = $250 * 12,000 =$3,000,000 - Total variable costs = Variable cost * Expected Sales = $100 * 12,000 =$1,200,000 - Profit = Total revenue - Total variable costs = $3,000,000 -$1,200,000 = $1,800,000 For the Laser printer: - Total revenue = Selling price * Expected Sales =$400 * 6,000 = $2,400,000 - Total variable costs = Variable cost * Expected Sales =$150 * 6,000 = $900,000 - Profit = Total revenue - Total variable costs =$2,400,000 - $900,000 =$1,500,000 For the Color Laser printer: - Total revenue = Selling price * Expected Sales = $1500 * 2,000 =$3,000,000 - Total variable costs = Variable cost * Expected Sales = $800 * 2,000 =$1,600,000 - Profit = Total revenue - Total variable costs = $3,000,000 -$1,600,000 = $1,400,000 Therefore, the total profit for IPM if the expected sales actually occur would be:$1,800,000 + $1,500,000 +$1,400,000 = $4,700,000 b) To break even, the total revenue from selling all three printer models must cover the total fixed costs and total variable costs. - Total fixed costs =$5,000,000 - Total variable costs = (Variable cost * Expected Sales) for all three printer models = ($100 * 12,000) + ($150 * 6,000) + ($800 * 2,000) =$3,200,000 The contribution margin for each printer model can be calculated as: - Inkjet printer: Selling price - Variable cost = $250 -$100 = $150 - Laser printer: Selling price - Variable cost =$400 - $150 =$250 - Color Laser printer: Selling price - Variable cost = $1500 -$800 = $700 Using the sales mix percentages, we can calculate the weighted average contribution margin: (60% *$150) + (30% * $250) + (10% *$700) = $185 So, the number of printers of all three types that IPM must sell to break even can be calculated as: Total revenue = Total fixed costs + Total variable costs Selling price * Number of printers sold * Sales mix =$5,000,000 + $3,200,000$185 * Number of printers sold = $8,200,000 Number of printers sold =$8,200,000 / $185 = 44,324 Therefore, IPM must sell 44,324 printers in total (with the specified sales mix) to break even. The number of printers of each type can be calculated based on the sales mix percentages. - Inkjet printer: 60% of 44,324 = 26,594 printers - Laser printer: 30% of 44,324 = 13,297 printers - Color Laser printer: 10% of 44,324 = 4,432 printers Do you know the answer? Not sure about the answer? Find the right answer to the question International Print Machines sells three computer printer models: a color inkjet, a laser printer, and a color laser printer. Total usual fixed costs for IPM is$5,000,000. Information about the print by subject Accounting, and if there is no answer or no one has given the right answer, then use the search and try to find the answer among similar questions.