Question

Assume that Bay King Products sells three varieties of canned seafood with the following prices costs: Selling Price per Case $125 $150 $100 Variable Cost per Case $95 $100 $80 Fixed Cost per Month Premium Royal Deluxe Entire firm $246,500 The sales mix (in cases) is 30% Premium, 2090 Royal, and 50% Deluxe.

I just need number 9 & 10, thanks.

Answer 1

1. Weighted Average Contribution Margin=290/10= $29(see note below)

NOTE: Weighted Average Contribution Margin

Particulars	Premium	Royal	Deluxe	Total
Selling price per case	$ 125	$ 150	$ 100
Less: Variable cost per case	$ 95	$ 100	$ 80
Contribution per case	$ 30	$ 50	$ 20
Sales Mix	3	2	5	10
Contribution Margin	$90	$100	$100	$290

Weighted Average Contribution Margin=290/10= $29

2. Break-Even Point(units)=8500 units(see note below)

NOTE:

At the break even point the Total Contribution=Total Fixed Cost

Assume that units sold to break even are as follows:

Premium=3x , Royal=2x and Deluxe=5x

Therefore Total Contribution=90x+100x+40x=230x

At Break Even Point 290x=$246500x`

i.e x=850

Number of units of Premium= 2550 units

Number of units of Royal= 1700 units

Number of units of Deluxe= 4250 units

3. Break –Even Point (Sales revenues)=$ 998750(see note below)

Note:

Premium=2550 units*$125=$318750

Royal=1700 units*$150=$2,55,000

Deluxe=4250 units*$100=$4,25,000

4. Required number of units to earn $20000 profit=9190 units

Note:

Required Profit=$20000

Particulars	Premium	Royal	Deluxe	Total
Selling price per case	$ 125	$ 150	$ 100
Less: Variable cost per case	$ 95	$ 100	$ 80
Contribution per case	$ 30	$ 50	$ 20
Number of units	3x	2x	5x	10x
Total Contribution	$ 90x	$ 100x	$100x	$ 2,66,500
Less: Fixed Costs				$ 2,46,500
Profit				$   20,000

Since $290x=$ 266500

Number of units of premium=2757 units

Number of units of Royal =1838 units

Number of units of Deluxe= 4595 units

Total number of units=9190 units