Question

Waterways Continuing Problem 06 (Part 1)

Waterways has a sales mix of sprinklers, valves, and controllers as follows.

Annual expected sales:
Sale of sprinklers		509,800 units at $27.00
Sale of valves		1,447,832 units at $11.00
Sale of controllers		81,568 units at $43.00

Variable manufacturing cost per unit:
Sprinklers		$14.00
Valves		$8.00
Controllers		$30.00
Fixed manufacturing overhead cost (total)				$703,000

Variable selling and administrative expenses per unit:
Sprinklers		$1.00
Valves		$1.00
Controllers		$3.00
Fixed selling and administrative expenses (total)				$1,720,496

Determine the sales mix based on unit sales for each product.

		Sprinklers		Valves		Controllers
Sales mix		%		%		%

Using the annual expected sales for these products, determine the weighted-average unit contribution margin for these three products. (Round answer to two decimal places, e.g. 5.25.)

Weighted-Average Unit Contribution Margin

$

Assuming the sales mix remains the same, what is the break-even point in units for these products? (Round answer to 0 decimal places, e.g. 2,520.)

Break-even Point in Units

units

Answer 1

Determine the sales mix based on unit sales for each product. Sprinklers Valves Controllers Sales mix 509800/2039200 = 25% 1447832/2039200 = 71% 81568/2039200 = 4%

Using the annual expected sales for these products, determine the weighted-average unit contribution margin for these three products. (Round answer to two decimal places, e.g. 5.25.) Weighted-Average Unit Contribution Margin (12*25%+2*71%+10*4%) $4.82

Assuming the sales mix remains the same, what is the break-even point in units for these products? (Round answer to 0 decimal places, e.g. 2,520.) Break-even Point in Units 2423496/4.82 502800 units