Most businesses sell several products at varying prices. The products often have different unit variable costs. Thus, the total profit andthe breakeven point depend on the proportions in which the products are sold. Sales mix is the relative contribution of sales amongvarious products sold by a firm. Assume that the sales of Jordan Incorporated for a typical year are as follows:Product Units Sold Sales MixA8Total18,2244,55622,780Product80%20100%Assume the following unit selling prices and unit variable costs:ContributionMargin$ 1540Selling Price$ 87147Variable Cost$ 72107Fixed costs are $414,000 per year. Assume that the sales mix, expressedvolume changes.terms of relative physical units sold, is constant as salesRequired:1. Determine the breakeven point in total units and, for this breakeven point, calculate the number of units of A and B that must besold. Use the weighted-average contribution margin approach.3. Determine the overall breakeven point in terms of sales dollars based on the weighted-average contribution margin ratio (CMR)(Hint: The weights for calculating the weighted-average CMR are based on relative sales dollars, not units, of the two products.) Breakdown the total sales dollars breakeven point into sales dollars for product A and sales dollars for product B.5. Assume the original facts except that now fixed costs are expected to be $41,400 higher than originally planned. How does thisexpected increase in fixed costs affect the breakeven point in units? How does the percentage change in the breakeven pointcompare to the percentage increase in fixed costs?Complete this question by entering your answers in the tabs below.Required 11 Required 3 Required 5Determine the breakeven point in total units and, for this breakeven point, calculate the number of units of A and B that mustbe sold. Use the weighted-average contribution margin approach. (Round your answer up to the nearest whole number.)

Break even point is the point at which there is no profit and no loss. Also at this point the…

Answered: Most businesses sell several products…

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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Refer to the table below which information refers to Triple A Corp. who produced and sold 50,000 units during a recent accounting period: How much is the contribution margin per unit? Sales 850,000 Manufacturing costs Fixed 210,000 Variable 140,000 Selling and Administrative costs Fixed 300,000 Variable 45,000 income tax rate 40% 1. P 16.60 2. P 31.00 3. P 7.30 4. P 13.30 Group of answer choices 1 2 3 4
Applying Differential Analysis to Profitability Scenarios Assume that Company A and Company B sell a microwave popcorn popper for $20. Although the companies have different cost structures, both companies currently show a profit of $21,000 based on sales of 14,000 units as shown in the following financial statements for the month of June. Both companies hold no inventory and sell contractual orders in the month. For the Month of June Company A Company B Sales ($20) $280,000 $280,000 Variable cost of goods sold ($5.00, 7.50, Company A and B, respectively) 70,000 105,000 Variable selling and administrative costs ($2.00, $4.00, Company A and B, respectively) 28,000 56,000 Contribution margin 182,000 119,000 Fixed cost of goods sold 105,000 70,000 Fixed selling and administrative costs 56,000 28,000 Profits Before-Tax $21,000 $21,000 For each company, determine the impact on monthly profit using differential analysis for each of the following separate scenarios.1.…
The following income statements illustrate different cost structures for two competing companies: Income Statements Company Name Perez Munoz Number of customers (a) 81 81 Sales revenue (a × $250) $ 20,250 $ 20,250 Variable cost (a × $175) N/A (14,175 ) Variable cost (a × $0) 0 N/A Contribution margin 20,250 6,075 Fixed cost (14,175 ) 0 Net income $ 6,075 $ 6,075 Required Reconstruct Perez’s income statement, assuming that it serves 162 customers when it lures 81 customers away from Munoz by lowering the sales price to $150 per customer. Reconstruct Munoz’s income statement, assuming that it serves 162 customers when it lures 81 customers away from Perez by lowering the sales price to $150 per customer.
Assume the following information for a merchandising company: Number of units sold 20,000 Selling price per unit $ 30 Variable selling expense per unit $ 3.60 Variable administrative expense per unit $ 3.10 Fixed administrative expenses $ 50,000 Beginning merchandise inventory $ 24,000 Ending merchandise inventory $ 19,000 Merchandise purchases $ 340,000 What is the contribution margin?
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Current Attempt in Progress Some financial information for each of three companies is reflected below in columns A, B, and C. Use your knowledge of CVP relationships to fill in the missing pieces numbered (1) through (9). Consider each company (i.e., column) separately. (Round variable cost per unit and contribution margin ratio to 2 decimal places, e.g. 0.24.) Selling price Total fixed costs Sales volume (units) Variable cost/unit Operating income Tax rate After-tax profit Contribution margin ratio A $6 $13,100 29,000 $40,840 (1) % (2) $28,588 (3) B $800 2,500 $384 25% $684,375 (4) (5) (6) с $389,000 $30.24 $229,240 40% 0.64
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2. Assume that the company expects sales of each product to decline to 41,000 units next year with no change in unit selling price. Prepare a contribution margin income statement for the next year (as shown above with columns for each of the two products). Note: Round "per unit" answers to 2 decimal places. Contribution margin Income (loss) HENNA COMPANY Contribution Margin Income Statement Carvings Mementos Units Total $ Per unit Total $ Per unit Total

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