s HomeWOR Check my work Malilbu Corporation has monthly fixed costs of $61,000.
ID: 2339400 • Letter: S
Question
s HomeWOR Check my work Malilbu Corporation has monthly fixed costs of $61,000. It sells two products for which it has provided the following information. Sales Price $15 20 Contribution Nargin $9 Product 1 Product 2 ook a. What total monthly sales revenue is required to break even if the relative sales mix is 30 percent for Product 1and 70 percent for Product 2? (Round your answer to the nearest dollar amount.) b. What total monthly sales revenue is required to earn a monthly operating income of $16,000 if the relative sales mix is 20 percent for Product 1 and 80 percent for Product 2? (Round your answer to the nearest dollar amount.) int a. Break even sales revenue b. Target sales revenueExplanation / Answer
Product 1
Product 2
Product Mix
30.00%
70.00%
Working
Product 1
Product 2
A
Price
$ 15.00
$ 20.00
B
Variable Cost per unit
$ 6.00
$ 16.00
C = A - B
Contribution Margin per unit
$ 9.00
$ 4.00
D
Product Mix
30.00%
70.00%
E = C x D
Weighted Average Contribution Margin
$ 2.70
$ 2.80
A
Total Fixed Cost
$ 61,000.00
B
Weighted Average Contribution Margin
$ 5.50
C = A/B
Multi Product Break Even point
11,091
C x 30%
Product 1
3,327
C x 70%
Product 2
7,764
Answer to part a
Sales revenue at breakeven
Product 1
Product 2
Total
Units sold
3,327
7,764
Price per Unit
$ 15.00
$ 20.00
Total sales revenue
$ 49,905.00
$ 155,280.00
$ 205,185.00
Total revenue at breakeven = $205,185.
Answer may vary due to rounding off
Part b
Product 1
Product 2
Product Mix
20.00%
80.00%
Working
Product 1
Product 2
A
Price
$ 15.00
$ 20.00
B
Variable Cost per unit
$ 6.00
$ 16.00
C = A - B
Contribution Margin per unit
$ 9.00
$ 4.00
D
Product Mix
20.00%
80.00%
E = C x D
Weighted Average Contribution Margin
$ 1.80
$ 3.20
A
Total Fixed Cost
$ 61,000.00
B
Desired Profits before Tax
$ 16,000.00
C = A + B
Total Contribution margin required
$ 77,000.00
D
Weighted Average Contribution Margin
5.00
E = C/D
Total no. of jobs required for earning desired profits
15,400
F x 20%
Product 1
3,080
F x 80%
Product 2
12,320
Sales revenue to earn profit of $16000
Product 1
Product 2
Total
Units sold
3,080
12,320
Price per Unit
$ 15.00
$ 20.00
Total sales revenue
$ 46,200.00
$ 246,400.00
$ 292,600.00
Total sales revenue = $292,600.
Product 1
Product 2
Product Mix
30.00%
70.00%
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