Question

33.

Madison Corporation sells three products (M, N, and O) in the following mix: 3:1:2. Unit price and cost data are:

	M			N			O
Unit sales price	$	7		$	4		$	10
Unit variable costs		3			2			4

Total fixed costs are $360,000. The selling price per composite unit for the current sales mix (rounded to the nearest cent) is:

35.Flannigan Company manufactures and sells a single product that sells for $450 per unit; variable costs are $252. Annual fixed costs are $897,600. Current sales volume is $4,240,000. Compute the contribution margin ratio.

36.Flannigan Company manufactures and sells a single product that sells for $300 per unit; variable costs are $174. Annual fixed costs are $852,600. Current sales volume is $4,230,000. Compute the break-even point in dollars.

Answer 1

33)

Selling price per composite unit will be the price which will be calculated by multiplying the ratio of the individual Product with it's individual selling price.

Product M = 7*3 = $21

Product N = 4*1 = $4

Product O = 10*2 = 40

Total Price = $65

35)

Contribution margin = Selling price - Variable cost

= 450 - 252

= $198

Contribution margin ratio = Contribution margin/selling price

= (198/450)*100

= 44%

36)

Contribution margin = Selling price - Variable cost

= 300 - 174

= $126

Contribution margin ratio = Contribution margin/selling price

=( 126/300)*100

=42%

Breakeven sales in dollars = Fixed cost/contribution margin ratio

= 852,600/42%

= $2,030,000

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