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QUESTION1 Berhannans Cellular sells phones for $100. The unit variable cost per phone is $50 plus a selling commission of 10%, Fixed manufacturing costs total $1,250 per month, while fixed selling and administrative costs total $2,500. A. What is the contribution (gross margin) per phone? B. What is the breakeven point in phones? How many phones must be sold to earn a targeted profit of $7,500? c. QUESTION 2 Following information is related to sales mix of product A, B and C Product Sales Price per Unit$15$21 $36 Variable Cost per Unit $9 $14 $19 Sales Mix Percentage 20% 20% 60% Total Fixed Cost $40,000 Calculate the break-even point in units and in dollars.

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Answer #1

COntribution:

Sale Price = $ 100

- Mnufacturing Price = $ 50

- Sales commision = $ 10

Contribution per unit = $ 40

Break Even Point in No.of phones:

Total FIxed Cost / Contribution point

= $ 1250 + $ 2500 / $ 40

= $ 3750 / $40

= $ 93.75 i.e 94 units

C. No.of units to be sold for $ 7500

= Fixed Cost + Profit / Contribution per unit

= $ 3750 + 7500 / 40

= 11250 / 40

= 281.25 i.e 286 units

Q2:

Mixed Contribution

Particulrs CPU 7 17 Expected CPU 20% 20% 60% Expected CPU 1.2 1.4 10.2 12.8

Break even point in units :

Total Fixed cost / Expected CPU

= 40000/12.8

= 3125 units

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