Homework Answers
*Any doubt please comment
| 1 | Contribution per unit | 51.47 |
| 2 | Contribution margin ratio | 39.93% |
| 3 | Break even point | 5564406 |
| 4 | Contribution margin ratio in sales mix | 67.99% |
| 5 | No of units | |
| Lazy chair | 9766752 | |
| High seat | 3497149 |
Workings:
1,2&3:
| Luxury hair pillow | |
| Selling price | 128.9 |
| Less: Variable costs | |
| Direct Material | 31.05 |
| Direct Labour | 14.5 |
| Variable manufacturing overhead | 8.9 |
| Variable selling expense | 22.98 |
| Contribution per unit | 51.47 |
|
Contribution margin [Contribution per unit/ Selling price] |
39.93% |
| Fixed manufacturing overhead | 121,580,000 |
| Fixed administrative overhead | 72,220,000 |
| Fixed marketing | 92,600,000 |
| Total fixed costs | 286,400,000 |
|
Break even point [Fixed costs /Contribution per unit] |
5564406 |
4&5:
| Lazy chair | High seat | |
| Selling price | 78.9 | 146.9 |
| Less: Variable costs | ||
| Direct Material | 10.01 | 15.11 |
| Direct Labour | 4.5 | 6.5 |
| Variable manufacturing overhead | 8.73 | 12.73 |
| Variable selling expense | 2.98 | 9.98 |
| Contribution per unit | 52.68 | 102.58 |
|
Contribution margin [Contribution per unit/ Selling price] |
66.77% | 69.83% |
| Fixed manufacturing overhead | 121,580,000 | 166,980,000 |
| Fixed administrative overhead | 72,220,000 | 255,780,000 |
| Fixed marketing | 92,600,000 | 95,550,000 |
| Total fixed costs | 286,400,000 | 518,310,000 |
| Sales mix | Contribution % | (a) *(b) | |
| (a) | (b) | ||
| Lazy chair | 0.6 | 66.77% | 40.06% |
| High seat | 0.4 | 69.83% | 27.93% |
| Weighted contribution | 67.99% |
| Fixed costs | |
| Lazy chair | 286,400,000 |
| High seat | 518,310,000 |
| Desired profit | 68,540,000 |
| 873,250,000 | |
| Weighted contribution | 67.99% |
| Desired sales [873,250,000/67.99%] | 1,284,327,863.28 |
| Sales mix | Desired sales | (a*b) | Selling price per unit | No of units sold | |
| (a) | (b) | (c ) | (d) | (c/d) | |
| Lazy chair | 0.6 | 1,284,327,863.28 | 770,596,717.97 | 78.9 | 9,766,752 |
| High seat | 0.4 | 1,284,327,863.28 | 513,731,145.31 | 146.9 | 3,497,149 |
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