Question

Reg 1A Reg 1B Req ЗА Req 3B Compute the break-even point in dollar sales for April. (Round intermediate percentage calculations to 1 decimal place and final answer to the nearest whole dollar.) Break-even point in dollar sales < Req 1B Req 3B >

Answer 1

1-a April

	Standard		Deluxe		Total
	Amount	%	Amount	%	Amount	%
Sales Revenue	$    3,47,800	100.00%	$          2,40,300	100.00%	$ 5,88,100	100.00%
Variable Expenses
Variable Production costs	$    1,03,400	29.73%	$             99,900	41.57%	$ 2,03,300	34.57%
Sales commission	$       76,516	22.00%	$             52,866	22.00%	$ 1,29,382	22.00%
Total Variable Expenses	$    1,79,916	51.73%	$          1,52,766	63.57%	$ 3,32,682	56.57%
Contribution Margin	$    1,67,884	48.27%	$             87,534	36.43%	$ 2,55,418	43.43%
Fixed Expenses
Advertising					$ 1,12,000
Depreciation					$    23,800
Administrative					$    66,500
Total Fixed Expenses					$ 2,02,300
Net Operating Income					$    53,118

1-b May

	1700		5700
	Standard		Deluxe		Total
	Amount	%	Amount	%	Amount	%
Sales Revenue	$    1,25,800	100.00%	$          5,07,300	100.00%	$ 6,33,100	100.00%
Variable Expenses
Variable Production costs	$       37,400	29.73%	$          2,10,900	41.57%	$ 2,48,300	39.22%
Sales commission	$       27,676	22.00%	$          1,11,606	22.00%	$ 1,39,282	22.00%
Total Variable Expenses	$       65,076	51.73%	$          3,22,506	63.57%	$ 3,87,582	61.22%
Contribution Margin	$       60,724	48.27%	$          1,84,794	36.43%	$ 2,45,518	38.78%
Fixed Expenses
Advertising					$ 1,12,000
Depreciation					$    23,800
Administrative					$    66,500
Total Fixed Expenses					$ 2,02,300
Net Operating Income					$    43,218

2-a Break Even point (April) = Fixed expenses / Weighted Contribution margin per unit
= $202300 / $34.52 = 5862 units
Weighted average contribution margin = $255418 / 7400 = $34.52
Standard = 5862 x 4700/7400 = 3723 units x $74 = $275502
Deluxe = 5862 x 2700/7400 = 2139 units x $89 = $190282
Total Break even point = $465784

2-b  Break Even point (April) = Fixed expenses / Weighted Contribution margin per unit
= $202300 / $33.18 = 6098 units
Weighted average contribution margin = $245518 / 7400 = $33.18
Standard = 6098 x 1700/7400 = 1401 units x $74 = $103674
Deluxe = 6098 x 5700/7400 = 4697 units x $89 = $418033
Total Break even point = $521707

Break even point will be higher since sales of standard units with higher contribution is lower