Energy Devices , INc

1.) Based from the computations, the total breakeven for the 3 kind of products is 17,576 units. The difference between the breakeven on shower nozzles and thermostats is almost by 10,140 units which mean that a lower contribution margin will require more units to be sold to reach its break even. Shower Noozles
Thermostats
Storm Windows
Total
Sales Volume
800
220
500
1520
Sales Price
10
80
100

Sales Revenue
8000
17600
50000
75600
Variable Cost
8
70
95

Variable cost to Sales
6400
15400
47500
69300
Unit Contribution to Sales
2
10
5

Utilization of Capacity

Total Variable Cost
6400
15400
47500
69300
Fixed Cost
27040
6760
16900
50700
Profit
-25440
-4560
-14400
-44400
BEP (unit)
13520
676
3380
17576
CM ratio
0.2
0.125
0.05

BEP ($)
135200
54080
338000
544856

2.) In order to minimize its losses, the company may increase sales price for the contribution margin to increase its sales revenue. Increasing sales revenue for each item lowers the breakeven sales required to eliminate the loss in each item.

3.) After spending $1000 advertising on fixed cost and assumed to boost and double its sales, the best product to invest would be on thermostats since it gives the highest percentage deduction to achieve profit. Shower Noozles
Thermostats
Storm Windows
Total
Sales Volume
1600
400
1000
3000
Sales Price
10
80
100

Sales Revenue
16000
32000
100000
148000
Variable Cost
8
70
95

Variable cost to Sales
12800
28000
95000
135800
Unit Contribution to Sales
2
10
5

Utilization of Capacity

Total Variable Cost
12800
28000
95000
135800
Fixed Cost
28040
7760
17900
53700
Profit
-24840
-3760
-12900
-41500
BEP (unit)
14020
776
3580
18376

Original Data
24840
3760
12900
Increase fixed cost but double sales
25440
4560
14400
Percentage reduction
2.358490566
17.54385965
10.41666667

4. Based from the