Sanchez Company Makes and Sells Two Models of Dog Houses

question 112

Essay

Sanchez Company makes and sells two models of dog houses, the Puppy Palace and the Canine Castle:
Sanchez has determined that it would break even at an annual sales volume of 5,000 units, of which 75% would be Puppy Palaces. What is the amount of Sanchez's estimated annual fixed costs?
$$\begin{array} { | l | r | l | } \hline & { \text { Puppy Palace } } &{ \text { Canine Castle } } \\\hline \text { Sales price per unit } & \$ 50 & \$ 75 \\\hline \text { Variable cost per unit } & 30 & 50 \\\hline \text { Contribution margin per unit } & \$ 20 & \$ 25 \\\hline\end{array}$$

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