Multiproduct CVP, Analyzing Break-Even Point, Target Profit, Degree of Operating Leverage
MowFun Company produces two models of electric lawnmower. Information about MowFun’s products is given below:
| Product A | Product B |
Sales revenue | $264,400 | $396,600 |
— Variable costs | 171,400 | 213,000 |
Contribution margin | $ 93,000 | $183,600 |
Total units sold | 300 | 500 |
MowFun’s fixed costs total $82,980.
Required:
1.Determine MowFun’s weighted average contribution margin and weighted average contribution margin ratio.
2.Calculate MowFun’s break-even units and break-even sales dollars.
3.Calculate the number of units of each product that will be sold at break even.
4.Calculate the total sales necessary for MowFun to earn a profit of $172,305.
5.Calculate the sales revenue generated from each product line if MowFun earns its target of $172,305 profit.
6.Calculate MowFun’s degree of operating leverage.
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