Question

Juniper Corp. makes three models of insulated thermos. Juniper has $400,000 in total revenue and total variable costs of $240,000. Its sales mix is given below Percentage o total sales Thermos A Thermos B Thermos C 35% 45 20 Required 1. Calculate the (overall) weighted-average contribution margin ratio hted Average CM 2. Determine the total sales revenue Juniper needs to break even if fixed 2. Determine the total sales revenue Juniper needs to break even if fkxed costs are $80.00. (Round your answer to the nearest whole number) ven 3. Determine the total sales revenue needed to generate a profit of $90,000. (Round your answer to the nearest whole number.)

Answer 1

Answer of Part 1:

Contribution Margin = Sales – Variable Expenses
Contribution Margin = $400,000 - $240,000
Contribution Margin = $160,000

Contribution Margin Ratio = Contribution Margin / Sales *100
Contribution Margin Ratio = $160,000 / $400,000 *100
Contribution Margin Ratio = 40%

Answer of Part 2:

Break Even Point = Fixed Costs / CM Ratio
Break Even Point = $80,000 / 0.4
Break Even Point = $200,000

Answer of Part 3:

Target Sales = (Fixed Costs + Profit) / CM Ratio
Target Sales = ($80,000 + $90,000) / 0.4
Target Sales = $425,000

Answer of Part 4:

Sales Revenue for Thermos A = Target Sales * Percentage of Total Sales
Sales Revenue for Thermos A = $425,000 * 35%
Sales Revenue for Thermos A = $148,750

Sales Revenue for Thermos B = Target Sales * Percentage of Total Sales
Sales Revenue for Thermos B = $425,000 * 45%
Sales Revenue for Thermos B = $191,250

Sales Revenue for Thermos C = Target Sales * Percentage of Total Sales
Sales Revenue for Thermos C = $425,000 * 20%
Sales Revenue for Thermos C = $85,000