Question

Cascade Builders Inc, produces three products: A, B, and C. The following information is presented for the three products: Fixed Cost 123,500 Product B 120 Units produced Product A 80 $ 200 $ 90 Price Per Unit Product C 200 $ 700 $ 400 400 $ 150 Variable Cost Per Unit Required: 1. Calculate the contribution margin for each product 2. Calculate the break-even point in units of the three products A, B, and C combination based on the sales mix percentage 3. Please give suggestions to the decision makers about how to increase profit based on the CVP analysis

Answer 1

For Requirement. 2 Contribution Margin per unit $ 8,800 + $ 30,000 + $ 60,000 400 $247 per unit Fixed Cost $ 123,500 Break - Even point in units = Fixed Cost Contribution Margin per unit. $123,500 $ 247 500 units Number of units sold ratio 80: 120: 200 2: 3:5 Break - Even point in units For Product A = 100 units 2 500m 10 150 units For Product B = 500X 3 10 250 units. For Product ca - 500x 5 1o

As we can see that, Break Even Quantity in Units = 500 units and Number of Units Produced = 400 units. To increase the Profit number of units produced and sold should be increase otherwise the will organization will continuously face the loss.

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