orris 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 $30 BB 45 15 CC 30 15 Their sales mix is reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $220,500 per year. A. What are total variable costs for Morris with their current product mix? Total variable costs $fill in the blank e0b38b060fef067_1 B. Calculate the number of units of each product that will need to be sold in order for Morris to break even.
orris 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 | $30 |
| BB | 45 | 15 |
| CC | 30 | 15 |
Their sales mix is reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $220,500 per year.
A. What are total variable costs for Morris with their current product mix?
Total variable costs $fill in the blank e0b38b060fef067_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 e0b38b060fef067_2 | ||
| BB | fill in the blank e0b38b060fef067_3 | ||
| CC | fill in the blank e0b38b060fef067_4 |
C. What is their break-even point in sales dollars?
Break-even point in sales $fill in the blank e0b38b060fef067_5
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 fd6ba8fb701bffb_1 |
| Product BB | fill in the blank fd6ba8fb701bffb_2 |
| Product CC | fill in the blank fd6ba8fb701bffb_3 |
| Total Sales | $fill in the blank fd6ba8fb701bffb_4 |
| Variable Costs | |
| Product AA | $fill in the blank fd6ba8fb701bffb_5 |
| Product BB | fill in the blank fd6ba8fb701bffb_6 |
| Product CC | fill in the blank fd6ba8fb701bffb_7 |
| Total Variable Costs | $fill in the blank fd6ba8fb701bffb_8 |
| Contribution Margin | $fill in the blank fd6ba8fb701bffb_9 |
| Fixed Costs | fill in the blank fd6ba8fb701bffb_10 |
| Net Income | $fill in the blank fd6ba8fb701bffb_11 |
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Introduction:
Total variable cost is the total of all variable costs associated with the cost of goods sold during a reporting period. It is an important determinant of corporate profitability. Total variable cost includes only costs that vary in relation to production or sales volume. Total Variable Cost is computed as the total of all variable variable costs in proportion to output or unit production, assisting in the analysis of the company's overall costing and profitability. It is calculated by multiplying the number of units produced by the Variable unit cost.
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