Question

Personal Electronix sells computer tablets and MP3 players. The business is divided into two divisions along product lines. CVP income statements for a recent quarter’s activity are presented below.

		Tablet Division		MP3 Player Division		Total
Sales		$793,800		$466,200		$1,260,000
Variable costs		563,598		256,410		820,008
Contribution margin		$230,202		$209,790		439,992
Fixed costs						143,172
Net income						$296,820

(a)

Determine sales mix percentage and contribution margin ratio for each division.

		Sales Mix Percentage
Tablet division		63 %
MP3 Player division		37 %

		Contribution Margin Ratio
Tablet division		29%
MP3 Player division		45%

Calculate the company’s weighted-average contribution margin ratio. (Round computations and final answer to 2 decimal places, e.g. 15.26%.)

Sales Mix Percentage = sale of Division /Total Sales

Sales Mix Percentage

Tablet Division = 793,800/1260,000 = 63%

MP3 Player Division =466,200 /1260000= 37%

Contribution Margin Ratio

Tablet Divisionl  = 230,202/793,800 =29%

MP3 Division = 209790/466,200 = 45%

Weighted Average contibution Margin

= 439,992/1260,000 = 34.92 % (Answer

Calculate the company’s break-even point in dollars. (Round computations to 2 decimal places and final answer to 0 decimal places, e.g. 1,526.)

Break-even point

$Enter the break-even point in dollars rounded to 0 decimal places

Answer 1

Answer- Sales mix- Tablet Division = ($793800/$1260000)*100 = 63%

MP3 Player Division = ($466200/$1260000)*100 =37%

Contribution margin ratio- (Contribution margin ratio/Sales)*100

Tablet Division = ($230202/$793800)*100 = 29%

MP3 Player Division = ($209790/$466200)*100 = 45%

Answer- Weighted average contribution margin ratio =Contribution margin ratio* Sales mix percentage

= ($29%*63%)+(45%*37%)

= 18.27%+ 16.65%

= 34.92%

Answer- Break-even point in dollars = Fixed costs/ Weighted average contribution margin ratio

= $143172/34.92%

= $410000

Answer- - Break-even point in dollars –Break-even point in dollars* Sales mix

Tablet Division = $410000*63% =$258300

MP3 Player = $410000*37%= $151700