CVP Analysis of Multiple Products
Steinberg Company produces commercial printers. One is the
regular model, a basic model that is designed to copy and print in
black and white. Another model, the deluxe model, is a color
printer-scanner-copier. For the coming year, Steinberg expects to
sell 90,000 regular models and 18,000 deluxe models. A segmented
income statement for the two products is as follows:
|
|
Regular Model |
|
Deluxe Model |
|
Total |
| Sales |
|
$13,500,000 |
|
$12,150,000 |
|
$25,650,000 |
| Less: Variable costs |
|
9,000,000 |
|
7,290,000 |
|
16,290,000 |
| Contribution margin |
|
$4,500,000 |
|
$4,860,000 |
|
$9,360,000 |
| Less: Direct fixed costs |
|
1,200,000 |
|
960,000 |
|
2,160,000 |
| Segment margin |
|
$3,300,000 |
|
$3,900,000 |
|
$7,200,000 |
| Less: Common fixed costs |
|
|
|
|
|
1,280,000 |
| Operating income |
|
|
|
|
|
$5,920,000 |
Required:
1. Compute the number of regular models and
deluxe models that must be sold to break even. Round all
intermediate calculations to four decimal places, and round your
final answers to the nearest whole unit.
| Regular models |
units |
| Deluxe models |
units |
2. Using information only from the total column
of the income statement, compute the sales revenue that must be
generated for the company to break even. Round the contribution
margin ratio to four decimal places. Use the rounded value in the
subsequent computation. (Express as a decimal-based amount rather
than a whole percentage.) Round the amount of revenue to the
nearest dollar.
| Contribution margin ratio |
|
| Revenue |
$ |