Bleeker Street Company Produces and Sells Two Lines of Business

question 89

Essay

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.

---

Definitions:

Mortgage Bonds

These are fixed-income securities secured by a specified pool of mortgages, providing an income stream derived from mortgage interest payments.

Unsecured

Refers to loans or bonds that are not protected by collateral, making them riskier investments.

Issuing Firm

A company or entity that offers securities for sale to the public or private investors, often to raise capital.

Bond Market

A financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the secondary market, primarily in the form of bonds.