Homework Answers
Part A
Unit Contribution margin = sales price per unit – variable cost per unit
Variable cost per unit = variable product cost + sales commission
Mahogany tables = 1000-(550+50) = $400
Pine tables = 600-(270+30) = $300
Part B
Shop’s sales mix:
Mahogany tables : Pine tables
40 : 60
Part C
Weighted average unit contribution margin = (400*40%) + (300*60%) = $340
Part D
Shop’s break-even sales in units = fixed cost / Weighted average unit contribution margin = 150500/340 = 443 units
Mahogany tables = 443*40% = 117
Pine tables = 443*60% = 266
Shop’s break-even sales in dollars = (117*1000)+(266*600) = $276600
Part E
Desired sales = (150500+100000)/340 = 737
Mahogany tables = 737*40% = 295
Pine tables = 737*60% = 442
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