Sales Mix and Break-Even AnalysisJordan Company has fixed costs of $1,097,400. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products areprovided below.Product Selling Price Variable Cost per UnitContribution Margin per Unit$560$340220$220120340The sales mix for products Q and 2 is 35% and 65%, respectively. Determine the break-even point in units of Q and Z. If required, round your answers to the nearestwhole number.a. Product Qb. Product 2unitsunits

Breakeven point is that point of sales revenue at which business is only recovering its fixed costs…

Answered: Sales Mix and Break-Even Analysis…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 5BE

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Lotts Company produces and sells one product. The selling price is 10, and the unit variable cost is 6. Total fixed cost is 10,000. Required: 1. Prepare a CVP graph with Units Sold as the horizontal axis and Dollars as the vertical axis. Label the break-even point on the horizontal axis. 2. Prepare CVP graphs for each of the following independent scenarios: (a) Fixed cost increases by 5,000, (b) Unit variable cost increases to 7, (c) Unit selling price increases to 12, and (d) Fixed cost increases by 5,000 and unit variable cost is 7.
Manatoah Manufacturing produces 3 models of window air conditioners: model 101, model 201, and model 301. The sales price and variable costs for these three models are as follows: The current product mix is 4:3:2. The three models share total fixed costs of $430,000. Calculate the sales price per composite unit. What is the contribution margin per composite unit? Calculate Manatoahs break-even point in both dollars and units. Using an income statement format, prove that this is the break-even point.
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: Their sales mix s reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $25,000 per year. What are total variable costs for Morris with their current product mix? Calculate the number of units of each product that will need to be sold in order for Morris to break even. What is their break-even point in sales dollars? Using an income statement format, prove that this is the break-even point.
Garrett Company provided the following information: Common fixed cost totaled 46,000. Garrett allocates common fixed cost to Product 1 and Product 2 on the basis of sales. If Product 2 is dropped, which of the following is true? a. Sales will increase by 300,000. b. Overall operating income will increase by 2,600. c. Overall operating income will decrease by 25,000. d. Overall operating income will not change. e. Common fixed cost will decrease by 27,600.
Contribution Margin Ratio, Break-Even Sales, Operating Leverage Elgart Company produces plastic mailboxes. The projected income statement for the coming year follows: Required: 1. Compute the contribution margin ratio for the mailboxes. 2. How much revenue must Elgart earn in order to break even? 3. What is the effect on the contribution margin ratio if the unit selling price and unit variable cost each increase by 15%? 4. CONCEPTUAL CONNECTION Suppose that management has decided to give a 4% commission on all sales. The projected income statement does not reflect this commission. Recompute the contribution margin ratio, assuming that the commission will be paid. What effect does this have on the break-even point? 5. CONCEPTUAL CONNECTION If the commission is paid as described in Requirement 4, management expects sales revenues to increase by 80,000. How will this affect operating leverage? Is it a sound decision to implement the commission? Support your answer with appropriate computations.
Variable cost method of product pricing Based on the data presented in Exercise 17, assume that Smart Stream Inc. uses the variable cost method of applying the cost-plus approach to product pricing. A. Determine the variable costs and the variable cost amount per unit for the production and sale of 10,000 cellular phones. B. Determine the variable cost markup percentage (rounded to two decimal places) for cellular phones. C. Determine the selling price of cellular phones. (Round markup to the nearest dollar.)
The profit function for two products is: Profit3x12+42x13x22+48x2+700, where x1 represents units of production of product 1, and x2 represents units of production of product 2. Producing one unit of product 1 requires 4 labor-hours, and producing one unit of product 2 requires 6 labor-hours. Currently, 24 labor-hours are available. The cost of labor-hours is already factored into the profit function, but it is possible to schedule overtime at a premium of 5 per hour. a. Formulate an optimization problem that can be used to find the optimal production quantity of products 1 and 2 and the optimal number of overtime hours to schedule. b. Solve the optimization model you formulated in part (a). How much should be produced and how many overtime hours should be scheduled?
Sales Mix and Break-Even Analysis Heyden Company has fixed costs of $599,400. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products follow: Product Selling Price Variable Cost per Unit Contribution Margin per Unit QQ $460 $280 $180 ZZ 620 440 180 The sales mix for Products QQ and ZZ is 90% and 10%, respectively. Determine the break-even point in units of QQ and ZZ. If required, round your answers to the nearest whole number. a. Product QQ units b. Product ZZ units
Sales Mix and Break-Even Analysis Olmstead Company has fixed costs of $1,071,360. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products follow: Product Selling Price Variable Cost per Unit Contribution Margin per Unit QQ $400 $200 $200 550 470 80 The sales mix for Products QQ and ZZ is 40% and 60%, respectively. Determine the break-even point in units of QQ and ZZ. If required, round your answers to the nearest whole number. a. Product QQ X units b. Product ZZ X units
Sales Mix and Break-Even Analysis Olmstead Company has fixed costs of $1,345,320. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products follow: Product Selling Price Variable Cost per Unit Contribution Margin per Unit QQ $380 $150 $230 ZZ 540 330 210 The sales mix for Products QQ and ZZ is 60% and 40%, respectively. Determine the break-even point in units of QQ and ZZ. If required, round your answers to the nearest whole number.
Sales Mix and Break-Even Analysis Olmstead Company has fixed costs of $1,135,630. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products follow: Product Selling Price Variable Cost per Unit Contribution Margin per Unit QQ $380 $220 $160 ZZ 500 400 100 The sales mix for Products QQ and ZZ is 65% and 35%, respectively. Determine the break-even point in units of QQ and ZZ. If required, round your answers to the nearest whole number. a. Product QQ fill in the blank 1 units b. Product ZZ fill in the blank 2 units
Sales Mix and Break-Even Analysis Megan Company has fixed costs of $1,255,540. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below. Product Selling Price Variable Cost per Unit Contribution Margin per Unit Model 94 $310 $160 $150 Model 81 420 280 140 The sales mix for products Model 94 and Model 81 is 30% and 70%, respectively. Determine the break-even point in units of Model 94 and Model 81 of the overall (total) product, E. If required, round your answers to the nearest whole number. a. Product Model 94 fill in the blank 1 unitsb. Product Model 81 fill in the blank 2 units

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