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Sanchez Co. sells two models of doghouses, the Puppy Palace and the Canine Castle. Sales price per unit Variable cost per unit Contribution unit margin per Puppy Palace RM 50 30 20 Canine Castle RM 75 50 25

Sanchez Co. sells two models of doghouses, the Puppy Palace and the Canine Castle. Sales price per unit Variable cost per unit Contribution unit margin per Puppy Palace RM 50 30 20 Canine Castle RM 75 50 25

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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2. Sanchez Co. sells two models of doghouses, the Puppy Palace and the Canine Castle. Sales price per unit Variable cost per unit Contribution margin per unit Puppy Palace RM 50 30 20 Canine Castle RM 75 50 25 Sanchez has determined that it would break even at an annual sales volume of 50,000 units, of which 75% would be Puppy Palaces. Required: a) What are the contribution margin ratios for each product and the company? b) What is the amount of Sanchez's estimated annual fixed costs? c) What is the sales mix? d) Prepare a product line income statement with operating income of RM400,000. Fixed production costs will increase RM45,000 and fixed administrative costs will increase RM22,500 to support the increase in volume.
Transcribed Image Text:2. Sanchez Co. sells two models of doghouses, the Puppy Palace and the Canine Castle. Sales price per unit Variable cost per unit Contribution margin per unit Puppy Palace RM 50 30 20 Canine Castle RM 75 50 25 Sanchez has determined that it would break even at an annual sales volume of 50,000 units, of which 75% would be Puppy Palaces. Required: a) What are the contribution margin ratios for each product and the company? b) What is the amount of Sanchez's estimated annual fixed costs? c) What is the sales mix? d) Prepare a product line income statement with operating income of RM400,000. Fixed production costs will increase RM45,000 and fixed administrative costs will increase RM22,500 to support the increase in volume.
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