The Noble Company manufactures two products. Information about the two products

ID: 2422913 • Letter: T

Question

The Noble Company manufactures two products. Information about the two products are as follows:

The company expects fixed costs to be $189,000. the firm expects 60% of its sales (in units) to be Product A ( a sales mix of 3:2).

A. Calculate the contribution margin per package

B. Determine the break even point in units for products A and B.

C. Determine the level of sales (in dollars) necessary to generate operating income of $135,000.

Product A Product B Selling price per unit $80 $30 Variable costs per unit $45 $15 Contribution margin per unit $35 $15

A. Contribution margin per package = 35 x 0.60 + 15 x 0.40

= 27

b. Break evn point in units = 189000/27

= 7000

A = 7000 x 0.60 = 4200

B = 7000 x 0.40 = 2800

C. Sales = (189000 + 135000)/45%

= 720000

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.