Tranco manufactures two products, Gizmo and Widget. The following are projections for the coming year: Units (Gizmos) Am

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Tranco manufactures two products, Gizmo and Widget. The
following are projections for the coming year:
Units (Gizmos) Amount (Gizmos) Units (Widgets) Amount (Widgets)
Totals Sales
10,000
$10,000
7,500
$10,000
$20,000
Costs:
Variable.
6,000

3,000

9,000
Fixed
2,000


5,600
7,600
($ 8,000)


($ 8,600)
($16,600)
Net income before taxes $ 2,000

$ 1,400
$ 3,400
Required:
a. What is the BEP for Gizmos, assuming the company only
produces Gizmos? {Ans: 5,000 units}
b. What is the BER for Widgets, assuming the company only wants
to produce Widgets? {Ans: $8,000}
c. What is the BEP if the company does decide to sell both the
products? {Ans: Gizmo: 6,884 units, Widgets: 5,194 – both
rounded}
d. If the company decides to sell one-Gizmos and one-Widgets and
there is no change in Tranco's cost function, what is the BEP?
{Ans: Gizmo 5,700 units; Widgets 5,700 units}