Question

PLEASE ANSWER THE FOLLOWING QUESTIONS:

Sales Mix and Break-Even Analysis Megan Company has fixed costs of $1,833,520. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below. Product Selling Price Variable Cost per Unit Contribution Margin per Unit Model 94 $950 $400 $550 Model 81 680 500 180 The sales mix for products Model 94 and Model 81 is 40% and 60%, respectively. Determine the break-even point in units of Model 94 and Model 81 of the overall (total) product, E. If required, round your answers to the nearest whole number. a. Product Model 94 units b. Product Model 81 units

Answer 1

1) Weighted average contribution margin per unit = (550*40%+180*60%) = 328

Break even unit = 1833520/328 = 5590 Units

Product Model 94 = 5590*40% = 2236 Units

Product Model 81 = 5590*60% = 3354 Units

2) Margin of safety (%) = (500000-405000)/500000 = 19%

3) Calculate following

Memory chips produced	72000	91200	114000
Total Costs
Total variable costs	24480	d) 0.34*91200 = 31008	38760
Total fixed costs	27360	27360	27360
Total Costs	51840	58368	66120
Cost per unit
Variable cost per unit	a) 24480/72000 = 0.34	g) 0.34	m) 0.34
Fixed cost per unit	b) 27360/72000 = 0.38	0.30	0.24
Total cost per unit	c) 0.72	0.64	0.58