Determine the company\'s weighted-average unit contribution margin and weighted-

Question

Determine the company's weighted-average unit contribution margin and weighted-average contribution margin ratio. (Round your answer to 2 decimal places.)

Calculate the company's break-even point in units and in sales revenue. (Round your "Sales Revenue" answer to 2 decimal places and "Sales Units" answer to the nearest whole number.)

Calculate the number of units that the company must sell to earn a $150,000 profit. (Round your answer to the nearest whole number. Use the amounts calculated in Requirement 1 )

Calculate the company's margin of safety and margin of safety as a percentage of sales if it sells 8,000 total pens. (Round your percentage of sales answer to 2 decimal places and the other answer to the nearest whole number.)

Explanation / Answer

Amt in $ Details Product A Product B Total Sales revenue                                   75,000                                  125,000                      200,000 Variable cost                                   33,000                                    38,000                        71,000 Contribution Margin                                   42,000                                    87,000                      129,000 Fixed Cost                        78,500 Net opearating income                        50,500 Units sold                                      5,000                                      5,000                        10,000 Sales price/unit                                            15                                            25 Contribution Margin ratio 56.00% 69.60% 64.50% % wieght of sales revenue 37.50% 62.50% Unit Contrbution Margin                                        8.40                                      17.40                          12.90 1 Weighted average unit contribution margin = 0.50*8.40+0.50*17.40                                   =                                      12.90 so weighted average unit contribution margin is $ 12.90 Weighted average contribution Margin ratio = 0.3750*0.56+0.6250*0.6960                                       = 64.50% So weighted average contribution margin ratio is 64.5% 2 Break even sales units Fixed cost                                      78,500 Weighted average contribution per unit=12.90 BEP units = 78500/12.90= 6085 units Break even sales Weighted average contribution margin ratio=64.5% Fixed cost                                      78,500 BE sales =78500/64.5%=$121,705 So break even sales is $ 121,705 3 For earning $150,000 profit , required contribution=$78500+$150,000                                     = $                       228,500.00 Weighted average contribution per unit=12.90 Required units to be sold =228500/12.90=                        17,713 units 4 Break even Units =                                        6,085 units Sales                                        8,000 units Margin of safety units                                      1,915 units Assuming same sales mix , sales revenue for 8000 units sold;                  =4000*15+4000*25                            = $                             160,000 Break even sales = $                             121,705 Margin of safety sales $                          38,295.00 Margin of safety as % of sales = 38295/160000 = 23.93%

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

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