Question

please complete all 6 parts & highlitgh answer key.

Keyz 1-2-3 is a top-selling electronic spreadshoot product Keyz is about to release Version 5.0. It divides its customers into two groups: new customers and upgrade customers (those who previously purchased Keyz 1-2-3.4.0 or earlier versions). Although the same physical product is provided to each customer group, sizable differences exist in soling prices and variable marketing costs: Click the icon to view the price and cost information) The fixed costs of Key 1-2-3 5.0 are $15,000,000. The planned sales mix in units is 60% new customers and 40% upgrade customers Read the requirements Requirement 1. What is the key 1-2-3 5.0 breakeven point in units, assuming that the planned 60%/10% sales mix is attained? Begin by determining the sales mix. For every bunde, 3 units are sold to new customers, and 2 units are sold to customer who bought upgrades Determine the formula used to calculate the breakeven point when there is more than one product sold then enter the amounts in the formula to calculate the breakeven point in bundles Food costs Contribution margin per bundle Breakeven point in bundles 15.000.000 625 24,000 The breakeven point is 60000 units for new customers and 90000 units for upgrade customers Enter any number in the edit fields and then click Check Answer Check Answer Clear All 6 ports remaining 6 8. 7. 5 O O U P T R E W F D S G K к H

Answer 1

1.
Weighted Average Contribution Margin per unit = $175 x 60% + 50 x 40% = $125 per unit

Break even units = Fixed Costs / Weighted Average Contribution Margin per unit
= $15000000 / 125 = 120000 units

New Customers = 120000 x 60% = 72000 units
Upgrade Customers = 120000 x 48% = 48000 units

2.
Contribution Margin = 220000 x 60% x $175 + 220000 x 40% x $50 = $27,500,000
Operating Income = $27500000 - 15000000 = $12,500,000

3.
a.
Weighted Average Contribution Margin per unit = $175 x 40% + 50 x 60% = $100 per unit

Break even units = Fixed Costs / Weighted Average Contribution Margin per unit
= $15000000 / 100 = 150000 units

New Customers = 150000 x 40% = 60000 units
Upgrade Customers = 150000 x 60% = 90000 units

b.
Weighted Average Contribution Margin per unit = $175 x 80% + 50 x 20% = $150 per unit

Break even units = Fixed Costs / Weighted Average Contribution Margin per unit
= $15000000 / 150 = 100000 units

New Customers = 100000 x 80% = 80000 units
Upgrade Customers = 100000 x 20% = 20000 units

c.
When more proportion of sales is for New Customers, break even point will increase since New customer has higher contribution margin per unit.

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