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Question 3 [10 marks] The Beetle Manufacturing Company produces the following three products: Screwdrivers Saws Hammers R40 R

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Answer #1

Requirement A

Total units to break-even= 6786 units

Requirement B

Units if Hammers to break-even = 3393

Working

Hammers Screwdrivers Saws Total
Price $                     40.00 $                     16.00 $                   50.00
Variable Cost per unit $                     28.00 $                     12.00 $                   30.00
Contribution Margin $                     12.00 $                       4.00 $                   20.00
Product Mix 50.00% 30.00% 20.00% 100.00%
Weighted Average Contribution Margin $                        6.00 $                       1.20 $                      4.00 $                 11.20

.

A Total Fixed Cost $             76,000.00
B Weighted Average Contribution Margin $                     11.20
C = A/B Multi Product Break Even point                          6,786
C x 50% Hammers                          3,393

Requirement C

Total units to earn $19,000= 8482

Working

A Total Fixed Cost plus profit $             95,000.00
B Weighted Average Contribution Margin $                     11.20
C = A/B Multi Product Break Even point                          8,482
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