Question

Hello! Can someone give me a step by step on how to do this? I don't have it in my textbook and im confused.

Thanks!
Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker. In the coming year, Texas-Q expects to sell 15,000 portable grills, 55,000 stationary grills, and 5,000 smokers. Information on the three models is as follows: Portable Stationary $203 Smokers $247 Price $90 Variable cost per unit 40 125 143 Total fixed cost is $2,379,680. Required: 1. What is the sales mix of portable grills to stationary grills to smokers? 2. Compute the break-even quantity of each product. 3. Prepare an income statement for Texas-Q for the coming year. What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break-even sales revenue. Enter the contribution margin ratio as a percentage rounded to two decimal places; round the break-even sales revenue to the nearest dollar. 4. Compute the margin of safety for the coming year.

Answer 1

Answer 1

	Portable	Stationary	Smokers
Sales mix	20.00%	73.33%	6.67%

It is calculated by dividing units sold b total units (i.e. 75,000)

Answer 2

	Portable	Stationary	Smokers
Individual Break even point	$ 1,130,611.00	$ 4,145,573.68	$ 376,870.33

Answer 3-a

Contribution margin = 42.10%

Break even point = $ 5,653,055

Calculations foe answer 2 and 3 a:

	Portable	Stationary	Smokers
Units	$            15,000	$            55,000	$           5,000
Selling Price	$              90.00	$            203.00	$        247.00
Variable Cost	$              40.00	$            125.00	$        143.00
Contribution Ratio	55.56%	38.42%	42.11%
Sales mix	20.00%	73.33%	6.67%
Weighted average contribution ratio	42.10%
Fixed costs	$2,379,680
Break even point	$                                                         5,653,055.02
Individual Break even point	$ 1,130,611.00	$ 4,145,573.68	$ 376,870.33

Answer 3-b

	Portable	Stationary	Smokers	Total
Sales	$       1,350,000	$    11,165,000	$   1,235,000	$ 13,750,000
Less: Variable cost	$          600,000	$       6,875,000	$      715,000	$   8,190,000
Contribution	$          750,000	$      4,290,000	$      520,000	$   5,560,000
Less: Fixed cost				$   2,379,680
Profit				$   3,180,320

Answer 4

Margin of safety = $ 8,096,945

Calculations:

Margin of safety = sales - Beak even sales

= $ 13,750,000 - $ 5,653,055

= $ 8,096,945

In case of any doubt, please comment.