Compute the contribution margin for each product. What is the expected net income?
Gayle’s Chemical Company is a manufacturer of cosmetic products in Jamaica.
Due to the onslaught of the coronavirus (COVID -19), Gayle decided to produce two new products to help in reducing the spread of the virus. The following information is available:
Hand Sanitizer Gloves
Selling price per unit $46 $36
Variable cost per unit $38 $24
Total fixed costs are $234,000. Willard plans to sell 21,000 units of Hand Sanitizer and 7,000 units of Gloves.
Required:
- Compute the contribution margin for each product.
- What is the expected net income?
- Assume the sales mix is 3 units of Hand Sanitizer for every 1 unit of Gloves.
What is the break-even point in units for each product?
Assume the sales mix is 3 units of Hand Sanitizer for every 2 units of Gloves.
What is the break-even point in units for each product?
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