Kimmel, Accounting, 6e PRINCIPLES Gradebook | OR?O, Downhadable eTextbook Do It!
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Question
Kimmel, Accounting, 6e PRINCIPLES Gradebook | OR?O, Downhadable eTextbook Do It! Review 19-2 Snow Cap Springs produces and sells water fitration systems for homeowners. Information regarding its three models is shown below Basic Basik Plus Premium Total Units sold Selling price Variable cout 240 1,200 $251 190 $405 291 $417 The company's total fixed costs to produce the filtration systems are $205,200. Determine the sales mix as a function of units sold for the three products. (ound answers to 0 decimal places, e.g. 12) The sales mix as a function of units soid Basic Plus the weighted-aversge unt contribution marain (Round anser to 2 decimal places eg 10.2s.) unt contribution margin 8 0. 5 6 7 3 D F GH JK LExplanation / Answer
Solution:
Part 1 --- Sales Mix
Basic
Basic Plus
Premium
Total
Unit Sold (A)
720
240
240
1200
Sales Mix (Unit Sold / Total Sold Units x 100)
60%
20%
20%
Part 2 – Weighted Average Contribution Margin
Basic
Basic Plus
Premium
Total
Unit Selling Price
$251
$405
$804
Less: Unit Variable Cost
$190
$291
$417
Contribution Margin Per Unit
$61
$114
$387
x Sales Mix (as calculated in part 1)
60%
20%
20%
= Weighted Average Contribution Margin
$36.60
$22.80
$77.40
$136.80
Weighted Average Contribution Margin = $136.80
Part 3 –
Break Even Point in Units = Total Fixed Cost / Weighted Average Contribution Margin per unit
= $205,200 / 136.80
= 1500 Units
Part 4 – Number of units of each model to break even
Calculation
Units
Basic
1500 Units x Sales mix 60%
900
Basic Plus
1500 Units x Sales mix 20%
300
Premium
1500 Units x Sales mix 20%
300
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Basic
Basic Plus
Premium
Total
Unit Sold (A)
720
240
240
1200
Sales Mix (Unit Sold / Total Sold Units x 100)
60%
20%
20%
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