two products, Product A and Product B epresents a contrbution margin of 5300. Pr
ID: 2437739 • Letter: T
Question
two products, Product A and Product B epresents a contrbution margin of 5300. Product E Product costs ounits sl uits sold and pr $1,170,000 dnd provide a contribution margin of $200 The compan fixed Show and label al Instructions product that the company must e weighted average contribution margin and the number of units achieve to break even. (b) The company has a desired net income of $130,000. How many units of Product B must the company sell if it achieves this goal with the current sales mix?Explanation / Answer
(a)
Weighted average contribution margin = (Product A contribution margin*Sales mix) + (Product B contribution margin*Sales mix)
= (300*60%) + (200*40%)
= 180 + 80
= 260
Breakeven point = Fixed costs / Weighted average contribution margin
= 1,170,000 / 260
= 4,500
Product A number of units to be sold = 4,500*60% = 2,700
Product B number of units to be sold = 4,500*40% = 1,800
(b)
Units to be sold to attain desired income = (Fixed costs+Desired income) / Weighted average unit contribution msrgin
= (1,170,000+130,000) / 260
= 5,000
Units of Product B to be sold = 5,000*40% = 2,000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.