Metlock sells books, movies, and magazines to a wide customer base. In a typical month, about 40% of its sales volume is from books, 40% from movies, and 20% from magazines. The selling price and cost information for each of these product categories is as follows. Selling price Variable cost/unit Books $9 3 Movies $14 Magazines $5 1 In addition, Metlock incurs facility and administrative costs that average $28,080 per month.
Metlock sells books, movies, and magazines to a wide customer base. In a typical month, about 40% of its sales volume is from books, 40% from movies, and 20% from magazines. The selling price and cost information for each of these product categories is as follows. Selling price Variable cost/unit Books $9 3 Movies $14 Magazines $5 1 In addition, Metlock incurs facility and administrative costs that average $28,080 per month.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Break-even point indicates that total units are to be sold by the business entity to recover its cost of goods sold. It can be calculated by dividing the total fixed cost by a weighted average contribution margin. The sales mix ratio is used to distribute the target sales units. So the required units should be distributed in sales mix ratio.
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