The Parsons Company Makes and Sells Two Models of Blenders

question 114

Essay

The Parsons Company makes and sells two models of blenders, as follows:
The Parsons Company expects to incur annual fixed costs of $151,250. The relative sales mix of the products is 3 units of Smoothie Pro for every one unit of Blendmaster.Required:
1) Determine the total number of blenders (Smoothie Pro and Blendmaster combined) that Parsons must sell to break even.2) What is the number of units of Smoothie Pro and of Blendmaster that Parsons would expect to sell at the break-even point?
$$\begin{array} { | l | l | l | } \hline & { \text { Smoothie Pro } } & { \text { Blendmaster } } \\\hline \text { Sales price per unit } & \$ 50 & \$ 80 \\\hline \text { Variable cost per unit } & 25 & 45 \\\hline \text { Contribution margin per unit } & \$ 25 & \$ 35 \\\hline\end{array}$$

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Definitions:

Market Segmentation

The process of dividing a broad consumer or business market into sub-groups of consumers based on some type of shared characteristics.

Standardization

Standardization is the process of implementing and developing technical standards based on the consensus of different parties to ensure safety, quality, and interoperability.

Pricing Strategy

The method companies use to price their products or services, often designed to maximize profitability, market share, or other objectives.

Package Design

Package design is the process of creating the container, graphics, and visible outer presence of a product, which serves both functional and aesthetic purposes.