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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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
(a)
(b)
✓ Your answer is correct.
In addition, Metlock incurs facility and administrative costs that average $28,080 per month.
(c)
Weighted-average contribution margin
Books
$9
eTextbook and Media
3
Find the weighted-average contribution margin per unit for this company. (Round answer to 2 decimal places, e.g. 15.25.)
Books
Movies
Your answer is correct.
Magazines
Books
Movies
eTextbook and Media
$14
9
Determine how many units from each product category Metlock must sell to break even. (Round answers to O decimals, e.g. 15.)
Movies
Your answer is incorrect.
Magazines.
Magazines
2160 units
2160 units
1080 units
$5
1
units
Metlock normally sells 3,000 books each month. Given the current sales mix, how many movies and magazines must it normally
sell in a month?
units
units
5.2 per unit
Attempts: unlimited.
Attempts: unlimited
Transcribed Image Text: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 (a) (b) ✓ Your answer is correct. In addition, Metlock incurs facility and administrative costs that average $28,080 per month. (c) Weighted-average contribution margin Books $9 eTextbook and Media 3 Find the weighted-average contribution margin per unit for this company. (Round answer to 2 decimal places, e.g. 15.25.) Books Movies Your answer is correct. Magazines Books Movies eTextbook and Media $14 9 Determine how many units from each product category Metlock must sell to break even. (Round answers to O decimals, e.g. 15.) Movies Your answer is incorrect. Magazines. Magazines 2160 units 2160 units 1080 units $5 1 units Metlock normally sells 3,000 books each month. Given the current sales mix, how many movies and magazines must it normally sell in a month? units units 5.2 per unit Attempts: unlimited. Attempts: unlimited
Expert Solution
Step 1

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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