Jackson Manufacturers has provided the following information regarding the two p

Question

Jackson Manufacturers has provided the following information regarding the two products that it sells: Sales price per unit Variable cost per unit Jet Boats Ski Boats $10,000 $24,000 $4,800 $18,000 Annual fixed costs are $300,000. How many units must be sold in order for Jackson to break even, assuming that Jackson sells five jet boats for every two ski boats sold? (Round any intermediate calculations to two decimal places, and your final answer to the nearest unit.) 0 A. 8 jet boats and 7 ski boats ( B. 7 jet boats and 8 ski boats ° C. 39 jet boats and 16 ski boats 0 D. 16 jet boats and 39 ski boats

Explanation / Answer

a)

A Jet Boats

b) True

c) Remain the same as production levels change

d) False

e) False

f) False

g) True

h) True

Ski Boats
Sales price per unit   $10,000   $24,000
Variable cost per unit   $4,800   $18,000
Contribution margin per unit   $5,200   $6,000

Weighted contribution = ($5,200 x 5 jet boats) + ($6,000 x 2 ski boats)

= $26,000 + $12,000 = $38,000

Weights = 5 jet boats + 2 ski boats = 7 boats
Weighted-average contribution margin per unit = $38,000 / 7 boats = $5,428.57 per boat

Required sales in units = (Fixed costs + Target profit) / Contribution margin per unit
Required sales in units = ($300,000 + 0 ) / $5,428.57 per boat = 55 boats

55 boats in the ratio of 5:2 are 39 jet boats and 16 ski boats.

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