Question

Snow Cap Springs produces and sells water filtration systems for homeowners. Information regarding its three models...

Snow Cap Springs produces and sells water filtration systems for homeowners. Information regarding its three models is shown below.

basic basic plus premium total
units sold 1,200 420 380 2,000
selling price 246 395 795
variable cost 197 290 417

The company’s total fixed costs to produce the filtration systems are $147,924.

a) Determine the sales mix as a function of units sold for the three products. (Round answers to 0 decimal places, e.g. 12.)

basic basic plus premium
the sales mix as a function of units sold % % %

b) Determine the weighted-average unit contribution margin. (Round answer to 2 decimal places, e.g. 10.25.)

weighted-average unit contribution margin $

c) Determine the total number of units that the company must produce to break even.

break-even point in units   

d) Determine the number of units of each model that the company must produce to break even.

basic units
basic plus units
premium units

Homework Answers

Answer #1
Req 1:
Basic Basic Plus Premium Total
Units Sold 1200 420 380 2000
Units sold as % of Total 60% 21% 19% 100%
Req 2:
Basic Basic Plus Premium Total
Selling Price per unit 246 395 795
Less: Variable cost per unit 197 290 417
Contribution margin per unit 49 105 378
Sales Mix 60% 21% 19%
Weighted Contribution 29.4 22.05 71.82 123.27
Weighted Contribution margin per unit: $ 123.27
Req 3:
Total Fixed cost: $ 147924
Weighted Average Contribution per unit: $ 123.27 per unit
Break even in units: Total Fixed cost/ Weighted average CM per unit
$147924 / 123.27 = 1200 units
Req 4:
Nnumber of Units of each model to be sold:
Basic (1200*60%) 720 units
Basic Plus (1200*21%) 252 units
Premium (1200*19%) 228 units
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