Question

Check my 9 Assume that Ocean King Products sells three varieties of canned seafood with the following prices and costs. Fixed Cont per Month 1.12 Selling Variable Price Cont per Case per Case $ 19 $ 15 20 18 25 16 points Variety 1 Variety 2 Variety 3 Entire firm $49,200 eBook Print References The sales mix (in cases) is 40 percent Variety 1, 35 percent Variety 2, and 25 percent Variety 3. Required: a. At what sales revenue per month does the company break even? b. Suppose the company is subject to a 35 percent tax rate on income. At what sales revenue per month will the company earn $53,625 after taxes assuming the same sales mix? Complete this question by entering your answers in the tabs below. Required A Required B Suppose the company is subject to a 35 percent tax rate on income. At what sales revenue per month will the company earn $53,625 after taxes assuming the same sales mix? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar.) Sales revenue Mc GROW < Prev 9 of 9 Next

Answer 1

A)
Particulars	Variety 1	Variety 2	Variety 3	Total
Selling price per Case (A)	$ 19	$ 20	$ 25
Less: Variable cost per Case	($ 15 )	($ 18)	($ 16 )
Contribution margin per Case	$ 4	$ 2	$ 9
x Sales mix (B)	40%	35%	25%
Weighted Average contribution margin per Case	$ 1.60	$ 0.70	$ 2.25	$ 4.55
Weighted Average selling price per Case (A x B)	$ 7.60	$ 7	$ 6.25	$ 20.85
Weighted average contribution margin ratio              = $ 4.55 / $ 20.85
Sales revenue per month required for break even                 = Fixed Costs / Weighted average contribution margin ratio                 = $ 49,200 x $ 20.85 / $ 4.55                 =   $ 225,455	$ 225,455
B)
Required sales revenue per month to earn target income          = ( Fixed Cost + Target Profit )/ Weighted average contribution margin ratio    = ($ 49,200 +   ( $ 53,625 / ( 1 - 35 % ) / Weighted average contribution margin ratio     = ( $ 49,200 + $ 82,500 ) x $ 20.85 / $ 4.55     =     $ 603,504	$ 603,504