PA6. 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: Sales Price Variable Cost Product per Unit per Unit AA $50 $30 15 BB 40 CC 30 10 Their sales mix is reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $258,000 per year. A. What are total variable costs for Morris with their current product mix? B. Calculate the number of units of each product that will need to be sold in order for Morris to break even. C. What is their break-even point in sales dollars? D. Using an income statement format, prove that this is the break-even point.
PA6. 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: Sales Price Variable Cost Product per Unit per Unit AA $50 $30 15 BB 40 CC 30 10 Their sales mix is reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $258,000 per year. A. What are total variable costs for Morris with their current product mix? B. Calculate the number of units of each product that will need to be sold in order for Morris to break even. C. What is their break-even point in sales dollars? D. Using an income statement format, prove that this is the break-even point.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:PA6. 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:
Sales Price
Variable Cost
Product
per Unit
per Unit
AA
BB
CC
$50
40
30
$30
15
10
Their sales mix is reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products
are $258,000 per year.
A. What are total variable costs for Morris with their current product mix?
B. Calculate the number of units of each product that will need to be sold in order for Morris to
break even.
C. What is their break-even point in sales dollars?
D. Using an income statement format, prove that this is the break-even point.
+
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