8. (Chapter 20) Snow cap Springs produces and sells water filtration systems for

Question

8. (Chapter 20) Snow cap Springs produces and sells water filtration systems for homeowners Information regarding its three models is shown below Basic Basic Plus Premium Total nits sold elling price ariable cost 744 $248 $200 264 $398 $284 192 1,200 $796 $418 The company's total fixed costs to produce the filtration systems are $126,852. . Determine the sales mix as a function of units sold for the three products. Basic Basic Plus Premiumm Determine the weighted-average unit contribution margin. Determine the total number of units that the company must produce to break even. Determine the number of units of each model that the company must produce to break even Basic Basic Plus Premiumm

Explanation / Answer

(1) - Sales Mix

(2) - Weighted Average Contribution Per unit

(3) Break Even Units (In total)

Break even Units = Fixed Cost/Weighted Average Contribution per unit

Break Even = ($126852/$115.32) = 1100 Units

(4) Break Even Units For each model

Particulars Sales Mix Basic (744/1200)*100 62% Basic Plus (264/1200)*100 22% Premium (192/1200)*100 16%

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