Question

Waterways has a sales mix of sprinklers, valves, and controllers as follows.
Annual expected sales:
Sale of sprinklers 450,000 units at $26.50
Sale of valves 1,500,000 units at $11.20
Sale of controllers 50,000 units at $42.50
Variable manufacturing cost per unit:
Sprinklers $13.96
Valves $7.95
Controllers $29.75
Fixed manufacturing overhead cost (total) $760,000
Variable selling and administrative expenses per unit:
Sprinklers $1.30
Valves $0.50
Controllers $3.41
Fixed selling and administrative expenses (total) $1,600,000
Instructions
(a) Determine the sales mix based on unit sales for each product.
(b) Using the annual expected sales for these products, determine the weighted-average unit
contribution margin for these three products. (Round to two decimal places.)
(c) Assuming the sales mix remains the same, what is the break-even point in units for these
products?
Part 2
Waterways packages some of its products into sets for home installations. One set sells for $77
with variable costs of production for the set at $50. Another set sells for $150 with variable costs
of $100.The parts for the $77 set take 9 machine hours to produce.The parts for the $150 set take
20 machine hours to produce.
Instructions
Given the information above, and assuming all of the package sets produced can be sold each
month, illustrate the best use of machine hours.
Part 3
The section of Waterways that produces controllers for the company provided the following
information.
Sales for month of February: 4,000
Variable manufacturing cost per unit: $9.75
Sales price per unit: $42.50
Fixed manufacturing overhead cost (per month for controllers): $81,000
Variable selling and administrative expenses per unit: $3.41
Fixed selling and administrative expenses (per month for controllers): $13,122
Instructions
(a) Using this information for the controllers, determine the contribution margin ratio, the degree
of operating leverage, the break-even point in dollars, and the margin of safety ratio for
Waterways Corporation on this product.
(b) What does this information suggest if Waterways’ cost structure is the same for the company
as a whole?

Answer 1

REF::  https://www.homeworklib.com/question/1226247/waterways-has-a-sales-mix-of-sprinklers-valves