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:Product Sales Priceper UnitVariable Costper UnitAA$45 $30 BB35 10 CC35 5 Their sales mix is reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $189,000 per year.A. What are total variable costs for Morris with their current product mix?Total variable costs $B. Calculate the number of units of each product that will need to be sold in order for Morris to break even. Number ofUnits per ProductAA fill in the blank BB fill in the blank CC fill in the blank C. What is their break-even point in sales dollars? D. Using an income statement format, prove that this is the break-even point. If an amount is zero, enter "0".Income StatementSales Product AA$fill in the blank Product BBfill in the blank Product CCfill in the blank Total Sales$fill in the blank Variable Costs Product AA$fill in the blank Product BBfill in the blank Product CCfill in the blank Total Variable Costs$fill in the blank Contribution Margin$fill in the blank Fixed Costsfill in the blank Net Income$fill in the blank

Breakeven point: Breakeven point is the point at which the company makes no profit nor loss or it is…

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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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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:

Product	Sales Price per Unit	Variable Cost per Unit
AA	$45	$30
BB	35	10
CC	35	5

Their sales mix is reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $189,000 per year.

A. What are total variable costs for Morris with their current product mix?

Total variable costs $

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
BB		fill in the blank
CC		fill in the blank

C. What is their break-even point in sales dollars?

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
Product BB	fill in the blank
Product CC	fill in the blank
Total Sales	$fill in the blank
Variable Costs
Product AA	$fill in the blank
Product BB	fill in the blank
Product CC	fill in the blank
Total Variable Costs	$fill in the blank
Contribution Margin	$fill in the blank
Fixed Costs	fill in the blank
Net Income	$fill in the blank

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