5) Shotz Corporation sells three products: J, K, and L. The following informatio
ID: 2544454 • Letter: 5
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5) Shotz Corporation sells three products: J, K, and L. The following information was taken from a recent budget 40,000 130,00030,000 $75 Unit sales Selling price Variable cost Total fixed costs are anticipated to be $2,450,000. $80 $60 40 65 50 Required: A. Determine Shotz's sales mix. B. Determine the weighted-average contribution margin C. Calculate the number of units of J, K, and L that must be sold to break evern. D. If Shotz desires to increase company profitability, should it attempt to increase or decrease the s of product K relative to those of J and L? Briefly explain.Explanation / Answer
As per chegg guidelines we answer one question per post. Kindly post remaining questions in next post Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Product J Product K Product L Total No of units 40,000.00 130,000.00 30,000.00 200,000.00 A) Sales mix 20.00% 65.00% 15.00% B) Selling price per unit 60.00 80.00 75.00 Variable cost per unit (40.00) (65.00) (50.00) Contribution margin per unit 20.00 15.00 25.00 Sales mix 20.00% 65.00% 15.00% b) Weighted average contribution 4.00 9.75 3.75 17.50 C) Fixed costs 2,450,000.00 Weighted average contribution 17.50 Break even = 2450,000/17.50 140,000.00 No of units = Sales Mix*140,000 28,000.00 91,000.00 21,000.00 D) Contribution margin per unit 20.00 15.00 25.00 Ranking 2.00 3.00 1.00 Increase in sale of Product K should be lowest as compared to J and L since product K has highest contribution margin
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