Multiproduct Company produces 3 products. PRODUCT 1 PRODUCT 2 PRODUCT 3 Price/unit $5 $6 $7Variable cost/unit 3 2 4Expected Sales (units) 100,000 150,000 250,000 Total fixed costs for the company are $1,240,000. Prepare an Income Statement using the format used in class (and in the text for sales mix) for the 3 products above and the company as a whole. Assuming the product mix would be the same at the break-even point as above, compute the Break-even point in sales dollars.( use 3 decimal points to calculate CM% ie. .105 = 10.5%) Explain what would happen to the overall contribution ratio if we sold 50,000 units of Product 1, 300,000 units of Product 2, and the same units of Product 3?WHY Multiproduct Company produces 3 products.PRODUCT 1PRODUCT 2PRODUCT 3Price/unit$5$6$7Variable cost/unit4Expected Sales (units)100,000150,000250,000Total fixed costs for the company are $1,240,000.a) Prepare an Income Statement using the format used in class (and in the text for sales mix)for the 3 products above and the company as a whole. Assuming the product mix would bethe same at the break-even point as above, compute the Break-even point in sales dollars.( use 3 decimal points to calculate CM% ie. .105 = 10.5%)b) Explain what would happen to the overall contribution ratio if we sold 50,000 units ofProduct 1, 300,000 units of Product 2, and the same units of Product 3?WHY

Multiproduct Company produces 3 products. PRODUCT 1 PRODUCT 2 PRODUCT 3 Price/unit $5 $6 $7 Variable cost/unit 3 2 4 Expected Sales (units) 100,000 150,000 250,000 Total fixed costs for the company are $1,240,000. Prepare an Income Statement using the format used in class (and in the text for sales mix) for the 3 products above and the company as a whole. Assuming the product mix would be the same at the break-even point as above, compute the Break-even point in sales dollars. ( use 3 decimal points to calculate CM% ie. .105 = 10.5%) Explain what would happen to the overall contribution ratio if we sold 50,000 units of Product 1, 300,000 units of Product 2, and the same units of Product 3? WHY

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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Multiproduct Company produces 3 products.

PRODUCT 1 PRODUCT 2 PRODUCT 3

Price/unit $5 $6 $7

Variable cost/unit 3 2 4

Expected Sales (units) 100,000 150,000 250,000

Total fixed costs for the company are $1,240,000.

Prepare an Income Statement using the format used in class (and in the text for sales mix) for the 3 products above and the company as a whole. Assuming the product mix would be the same at the break-even point as above, compute the Break-even point in sales dollars.

( use 3 decimal points to calculate CM% ie. .105 = 10.5%)

Explain what would happen to the overall contribution ratio if we sold 50,000 units of Product 1, 300,000 units of Product 2, and the same units of Product 3?

WHY

Multiproduct Company produces 3 products.
PRODUCT 1
PRODUCT 2
PRODUCT 3
Price/unit
$5
$6
$7
Variable cost/unit
4
Expected Sales (units)
100,000
150,000
250,000
Total fixed costs for the company are $1,240,000.
a) Prepare an Income Statement using the format used in class (and in the text for sales mix)
for the 3 products above and the company as a whole. Assuming the product mix would be
the same at the break-even point as above, compute the Break-even point in sales dollars.
( use 3 decimal points to calculate CM% ie. .105 = 10.5%)
b) Explain what would happen to the overall contribution ratio if we sold 50,000 units of
Product 1, 300,000 units of Product 2, and the same units of Product 3?
WHY

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