Question

oint in dollars 1. Divided 2. Allocat E6.14 (LO 4), A Contador Com E6.10 (LO 2), AP Personal Electronix sells computer tablets and MP3 players. The business is divided into two divisions along product lines. CVP income statements for a recent quarter's activity are pre sented below. Tablet Division MP3 Player Division Total $600,000 Sales $400,000 $1,000,000 420,000 Variable costs 260,000 680,000 Contribution margin $180.000 $140,000 320,000 120,000 Fixed costs Net income $ 200,000 Instructions a. Determine the sales mix percentage based on sales revenue and contribution margin ratio for each division b. Calculate the company's weighted average contribution margin ratio. c. Calculate the company's break-even point in dollars. d. Determine the sales level in dollars for each division at the break-even point. Instructions a. Compute b. Assuming each com c. Discussh

Answer 1

(a) Sales Mix Percentage based on Sales Revenue-

Tablet Division- 600000*100/1000000 = 60%

MP3 Player Division - 400000*100/1000000 = 40%

Contribution Margin Ratio-

Tablet Division- 180000*100/600000 = 30%

MP3 Player Division - 140000*100/400000 = 35%

(b) Weighted average Contribution Margin ratio- 320000*100/1000000 = 32%

(c) Company's Break Even point in Dollars- 120000*100/32 = 375000

(d) Sales Level in Dollars for Each Division at the Break Even point-

Tablet Division- 375000 *60% = 225000

MP3 Player Division = 375000 *40% = 150000