Analyzing Multiproduct CVP, Break-Even Point, Target Profit, Margin of Safety
Lemming Company produces two backpack models. Information about its products follows:
| Product A | Product B |
Sales revenue | $135,000 | $77,000 |
— Variable costs | 67,000 | 21,500 |
Contribution margin | $ 68,000 | $55,500 |
Total units sold | 15,000 | 5,000 |
Lemming’s fixed costs total $51,700.
Required:
1.Determine Lemming’s weighted average contribution margin and weighted average contribution margin ratio.
2.Calculate Lemming’s break even in units and in sales dollars.
3.Calculate the number of units that Lemming must sell to earn a $95,000 profit.
4.Calculate Lemming’s margin of safety and margin of safety as a percentage of sales if it sells 35,000 total backpacks.
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