a) Explanation Sales mix: Sales mix refers to the relative percentage of the total sales based on the provided number of products. In other words, it is expressed as a percentage of units sold for each product with respect to the total units sold for all the products. Break-Even Sales: Sales volume required to cover the fixed and variable costs and left out with neither profit nor loss is called break-even point of sales. Contribution Margin Ratio : The contribution margin ratio shows the amount of difference in the actual sales value and the variable expenses in percentage. Contribution margin ratio = Contribution margin Sales Find the breakeven sales revenue, if the relative sales mix is 40 percent for product 1 and 60 percent for product 2: Average contribution margin ratio: Sales price Contribution margin Contribution margin ratio Contribution margin ratio for given sales mix (1) Product 1 $12 $9 75% ( $ 9 ÷ $ 12 ) 30% ( 75 % × 40 % ) Product 2 $20 $6 30% ( $ 6 ÷ $ 20 ) 18% ( 30 b) To determine Compute the total monthly sales revenue that is required to earn a monthly operating income of $81,000 where the relative sales mix is 20% for product 1 and 80% for product 2.

Gen Combo Loose Leaf Financial Accounting; Connect Access Card

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Question

100%

Chapter 20, Problem 4E

To determine

Find the breakeven sales revenue, if the relative sales mix is 40 percent for product 1 and 60 percent for product 2.

To determine

Compute the total monthly sales revenue that is required to earn a monthly operating income of $81,000 where the relative sales mix is 20% for product 1 and 80% for product 2.

Expert Solution & Answer

Chapter 20 Solutions

Gen Combo Loose Leaf Financial Accounting; Connect Access Card

Ch. 20 - Prob. 1STQ Ch. 20 - Prob. 2STQ Ch. 20 - Prob. 3STQ Ch. 20 - Prob. 4STQ Ch. 20 - Prob. 5STQ Ch. 20 - Prob. 1DQ Ch. 20 - Prob. 2DQ Ch. 20 - Prob. 3DQ Ch. 20 - Prob. 4DQ Ch. 20 - 5. Define the relevant range of activity.

Ch. 20 - Prob. 6DQ Ch. 20 - Prob. 7DQ Ch. 20 - Prob. 8DQ Ch. 20 - Prob. 9DQ Ch. 20 - Prob. 10DQ Ch. 20 - Prob. 11DQ Ch. 20 - 12. Explain why businesses normally can reduce...Ch. 20 - Prob. 13DQ Ch. 20 - Prob. 14DQ Ch. 20 - Prob. 15DQ Ch. 20 - Prob. 1BE Ch. 20 - Prob. 2BE Ch. 20 - Prob. 3BE Ch. 20 - Prob. 4BE Ch. 20 - Prob. 5BE Ch. 20 - Prob. 6BE Ch. 20 - Prob. 7BE Ch. 20 - Prob. 8BE Ch. 20 - Prob. 9BE Ch. 20 - Prob. 10BE Ch. 20 - Prob. 1E Ch. 20 - Prob. 2E Ch. 20 - Prob. 3E Ch. 20 - Prob. 4E Ch. 20 - Prob. 5E Ch. 20 - Prob. 6E Ch. 20 - EXERCISE 20.7 Using Cost-Volume-Profit...Ch. 20 - Prob. 8E Ch. 20 - Prob. 9E Ch. 20 - Prob. 10E Ch. 20 - EXERCISE 20.11 Applying CVP Concepts Mathias...Ch. 20 - Prob. 12E Ch. 20 - EXERCISE 20.13 Determining a Bid Price Using CVP...Ch. 20 - Prob. 14E Ch. 20 - Prob. 15E Ch. 20 - Prob. 1AP Ch. 20 - PROBLEM 20.2A Estimating Costs and Profits Blaster...Ch. 20 - Prob. 3AP Ch. 20 - PROBLEM 20.4A Drawing a Cost-Volume- Profit...Ch. 20 - Prob. 5AP Ch. 20 - Prob. 6AP Ch. 20 - Prob. 7AP Ch. 20 - Prob. 8AP Ch. 20 - Prob. 1BP Ch. 20 - Prob. 2BP Ch. 20 - Prob. 3BP Ch. 20 - Prob. 4BP Ch. 20 - Prob. 5BP Ch. 20 - Prob. 6BP Ch. 20 - Prob. 7BP Ch. 20 - Prob. 8BP Ch. 20 - CASE 20.1 CVP from Different Points of View Assume...Ch. 20 - Prob. 2CTC Ch. 20 - Prob. 3CTC

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