The businesses information for 2 products is: Product % of total sales * Break-even point.Product A...
The businesses information for 2 products is:
|
Product % of total sales * Break-even point.Product A |
ProductB |
||
|
Sales Price |
$16 |
$29 |
|
|
Variable Costs |
$6 |
$9 |
|
|
Annual sales (units) |
12,000 |
8,000 |
|
|
Fixed Costs(all products) |
$120,000 |
||
Complete the following:
1.Identify the sales mix.
2.Calculate the unit contribution margin for each product.
3.Calculate the weighted average unit contribution margin (WACM):
4.Calculate the break-even point based on the WACM
5.Calculate the break-even point for the individual products as:
Homework Answers
1. sales mix = (12,000 / 8000) =>3:2.
(3 units of A and 2 units of B).
2.unit contribution margin = sale price per unit - variable cost per unit.
product A = $16-6=>$10.
product B =$29-9
=>$20.
3.weighted average contribution margin
[($10 * 3 units weight) + ($20 *2 units weight)] / (3+2)
=>(30+40) /5
=>$14.
4.break even point = 120,000 fixed costs / $14 contribution
=>8,572 units.
5.break even point for individual products
product A = 8,572 units * 3 /5 =>5,143 units.
product B = 8,572*2/5 =.3,429 units.
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