Question

Jake's Pet Supplies:

Please see highlighted Table yellow portion:

Need: Multiproduct Breakeven point: in units and sales revenue at break even and target profit point for Product 1, Product 2 and the totals

Land it $6.00 60% Jake's Pet Supplies Pro Forma Contribution Margin Income Statement For the month ending June 30 ASSUMPTIONS Product 31: Launch-it Sales price per unit $10.00 Variable costs per unit: Sales comission $1.00 Purchase price $1.00 Shipping and handling Total variable cost per unit $4.00 Product 31 Unit CM CM? Breakeven point: -in units -in sales revenue 250 $2,500.00 Product 31 Predict 12 $2,000.00 $3,000.00 $800.00 $1,800.00 $1,200.00 $1,200.00 $2.00 Monthly Sales Variable costs Contribution margin Fixed expences Operating income Target profit volume: -in units -in sales revenue! Total $5,000.00 $2,600.00 $2,400.00 $1,500.00 $900.00 1,583 $15,833.33 Monthly volume 200 WACMX 60% 40% 48% Product 12: Tratatinas Sales price per unit $30.00 Variable costs per unit: Sales comission $3.00 Purchase price $7.00 Shipping and handling $8.00 Total variable cost per unit $18.00 Irelating $12.00 40% Product 12 Unit CM CM Breakeven point: -in units -in sales revenus Calculation of Weighted average CM per unit Product 31 Product 12 60% 40% $6.00 $12.00 Total 100% 125 $3,750.00 Sales Mix CM per Unit Monthly volume 100 Target profit volume: -in units in sales revenue WACM/unit $3.60 $4.80 $8.40 792 123.750.00 Fixed costs per month: Work contract Trade show entry fees Total fixed costs per month $1,000.00 $500.00 $1,500.00 Multiproduct Breakeven point: -in units Sales revenue at breakeven Product 31 Product 12 4171 313 $2.500.00 $3,750.00 Total 729 46.250.00 Target profit per month $8,000.00 Expected change in volume Total Multiproduct Target profit point: -in units Sales revenue at target profit Product 31 Product 12 1583 1979 $15,833.33 $23.750.00 3563 139,583.33

Answer 1

Jake's Pet Supplies Multiproduct Breakeven point: - in units Sales revenue at breakeven Product 1 Product 2 Total 125 63 188 $1,250 $1,890 $3,140 Multiproduct Target Profit Point: Product 1 Product 2 Total - in units 792 396 1188 Sales revenue at target profit $7,9201 $11,880 $19,800 There is slight difference in break even sales and sales at target point due to rounding off Working Notes: Weighted Average contribution Margin = 48% Multiproduct breakeven point in dollars = Fixed expenses/Weighted average contribution Margin % Multiproduct breakeven point in dollars = $1,500/48% = $3,125 To determine Sales Mix Sales Sales mix Product 1 Product 2 $2,000 $3,000 40.00% 60.00% Sales revenue at breakeven $1,250 $1,875 ($3125*40%) ($3125*60%) $10 $30 125 63 Sales price per unit Break even point (in units) Target profit Fixed cost Total $8,000 $1,500 $9,500 Multiproduct Target profit point in dollars = $9,500/48% = $19,792 Sales revenue at breakeven $7,917 $11,875 ($19,792*40%) ($19,792*60%) $10 $30 792 396 Sales price per unit Break even point (in units)