The garden supply company is introducing various aged trees to their product range in 2021. They have provided the following information relating to its planned activities. I-year-old 2-year-old 3-year-old Selling price $14 $24 $34 Variable cost/unit $10 $15 $20 Expected Sales Volume 40,000 30,000 10,000 Total fixed cost = $180,000 Required Calculate the contribution margin for each product, the sales mix percentages and the weighted average contribution margin. Calculate the break-even point in total units and units per product based on the data. c. Management is now considering increasing the price of 1-year-old trees to $15 with an expected drop in volume to 30,000 trees while lowering the price of 3-year-old trees to $29 with an expected increase in volume to 20,000 trees. There would be no change to the price and sales volume of 2-year-old trees. Implementing this initiative would increase annual fixed costs by $10 000. On the available data, would you recommend the initiative?
The garden supply company is introducing various aged trees to their product range in 2021. They have provided the following information relating to its planned activities.
I-year-old 2-year-old 3-year-old
Selling price $14 $24 $34
Variable cost/unit $10 $15 $20
Expected Sales Volume 40,000 30,000 10,000
Total fixed cost = $180,000
Required
- Calculate the contribution margin for each product, the sales mix percentages and the weighted average contribution margin.
- Calculate the break-even point in total units and units per product based on the data.
c. Management is now considering increasing the price of 1-year-old trees to $15 with an expected drop in volume to 30,000 trees while lowering the price of 3-year-old trees to $29 with an expected increase in volume to 20,000 trees. There would be no change to the price and sales volume of 2-year-old trees. Implementing this initiative would increase annual fixed costs by $10 000. On the available data, would you recommend the initiative?
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