Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and unit variable cost for the three products are as follows: Product Sales Price per Unit Variable Cost per Unit AA $55 $25 BB 40 10 CC 30 5 Their sales mix is reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $377,000 per year. A. What are total variable costs for Morris with their current product mix? Total variable costs $fill in the blank 5d1c9104201ef8e_1 B. Calculate the number of units of each product that will need to be sold in order for Morris to break even. Number of Units per Product AA fill in the blank 5d1c9104201ef8e_2 BB fill in the blank 5d1c9104201ef8e_3 CC fill in the blank 5d1c9104201ef8e_4 C. What is their break-even point in sales dollars? Break-even point in sales $fill in the blank 5d1c9104201ef8e_5 Feedback A. Determine the composite sales price, variable cost, and contribution margin for each product. The total of the three composite amounts for contribution margin will be used to determine the amount of break-even units (using the total fixed costs). Once the break-even units are determined, use that amount times the composite variable cost to determine the total variable costs. B. Use the break-even units determined in Part A and the corresponding ratio for each product to determine the total number of units for each product. C. Use the break-even units for each product times the corresponding sales price to determine the sales dollars amount for each product. D. Using an income statement format, prove that this is the break-even point. If an amount is zero, enter "0". Income Statement Sales Product AA $fill in the blank e25541fe201702b_1 Product BB fill in the blank e25541fe201702b_2 Product CC fill in the blank e25541fe201702b_3 Total Sales $fill in the blank e25541fe201702b_4 Variable Costs Product AA $fill in the blank e25541fe201702b_5 Product BB fill in the blank e25541fe201702b_6 Product CC fill in the blank e25541fe201702b_7 Total Variable Costs $fill in the blank e25541fe201702b_8 Contribution Margin $fill in the blank e25541fe201702b_9 Fixed Costs fill in the blank e25541fe201702b_10 Net Income $fill in the blank e25541fe201702b_11

Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and unit variable cost for the three products are as follows: Product Sales Price per Unit Variable Cost per Unit AA $55 $25 BB 40 10 CC 30 5 Their sales mix is reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $377,000 per year. A. What are total variable costs for Morris with their current product mix? Total variable costs $fill in the blank 5d1c9104201ef8e_1 B. Calculate the number of units of each product that will need to be sold in order for Morris to break even. Number of Units per Product AA fill in the blank 5d1c9104201ef8e_2 BB fill in the blank 5d1c9104201ef8e_3 CC fill in the blank 5d1c9104201ef8e_4 C. What is their break-even point in sales dollars? Break-even point in sales $fill in the blank 5d1c9104201ef8e_5 Feedback A. Determine the composite sales price, variable cost, and contribution margin for each product. The total of the three composite amounts for contribution margin will be used to determine the amount of break-even units (using the total fixed costs). Once the break-even units are determined, use that amount times the composite variable cost to determine the total variable costs. B. Use the break-even units determined in Part A and the corresponding ratio for each product to determine the total number of units for each product. C. Use the break-even units for each product times the corresponding sales price to determine the sales dollars amount for each product. D. Using an income statement format, prove that this is the break-even point. If an amount is zero, enter "0". Income Statement Sales Product AA $fill in the blank e25541fe201702b_1 Product BB fill in the blank e25541fe201702b_2 Product CC fill in the blank e25541fe201702b_3 Total Sales $fill in the blank e25541fe201702b_4 Variable Costs Product AA $fill in the blank e25541fe201702b_5 Product BB fill in the blank e25541fe201702b_6 Product CC fill in the blank e25541fe201702b_7 Total Variable Costs $fill in the blank e25541fe201702b_8 Contribution Margin $fill in the blank e25541fe201702b_9 Fixed Costs fill in the blank e25541fe201702b_10 Net Income $fill in the blank e25541fe201702b_11

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and unit variable cost for the three products are as follows:

Product	Sales Price per Unit	Variable Cost per Unit
AA	$55	$25
BB	40	10
CC	30	5

Their sales mix is reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $377,000 per year.

A. What are total variable costs for Morris with their current product mix?

Total variable costs $fill in the blank 5d1c9104201ef8e_1

B. Calculate the number of units of each product that will need to be sold in order for Morris to break even.

	Number of Units per Product
AA		fill in the blank 5d1c9104201ef8e_2
BB		fill in the blank 5d1c9104201ef8e_3
CC		fill in the blank 5d1c9104201ef8e_4

C. What is their break-even point in sales dollars?

Break-even point in sales $fill in the blank 5d1c9104201ef8e_5

Feedback

A. Determine the composite sales price, variable cost, and contribution margin for each product. The total of the three composite amounts for contribution margin will be used to determine the amount of break-even units (using the total fixed costs). Once the break-even units are determined, use that amount times the composite variable cost to determine the total variable costs.

B. Use the break-even units determined in Part A and the corresponding ratio for each product to determine the total number of units for each product.

C. Use the break-even units for each product times the corresponding sales price to determine the sales dollars amount for each product.

D. Using an income statement format, prove that this is the break-even point. If an amount is zero, enter "0".

Income Statement
Sales
Product AA	$fill in the blank e25541fe201702b_1
Product BB	fill in the blank e25541fe201702b_2
Product CC	fill in the blank e25541fe201702b_3
Total Sales	$fill in the blank e25541fe201702b_4
Variable Costs
Product AA	$fill in the blank e25541fe201702b_5
Product BB	fill in the blank e25541fe201702b_6
Product CC	fill in the blank e25541fe201702b_7
Total Variable Costs	$fill in the blank e25541fe201702b_8
Contribution Margin	$fill in the blank e25541fe201702b_9
Fixed Costs	fill in the blank e25541fe201702b_10
Net Income	$fill in the blank e25541fe201702b_11

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