Question

Rojin Company prepared the following budget information for the coming year:
	Product A	Product B	Product C	Total
Sales	$300,000	$200,000	$100,000	$600,000
Variable expenses	75,000	120,000	57,000	252,000
Contribution margin	$225,000	$80,000	$43,000	$348,000
Fixed expense				200,000
Operating income				$148,000
The budget assumes the sale of 15,000 units of A, 100,000 units of B, and 80,000 units of C.

When answering the following ensure you round to the nearest dollar - do not enter any pennies or decimals.:

What is the companies break even point in sales dollars given the sales mix above?:

If the budgeted sales mix is maintained, what is the operating income is 200,000 units are sold?

Answer 1

Contribution margin	225000	80000	43000	348000
Units	15000	100000	80000	195000
Contribution P.U (A)	15	0.8	0.5375
Weighted Average Contriution Margin Ratio
Units	15000	100000	80000	195000
Sales mix(B)	7.69%	51.28%	41.03%	100.00%
Weighted Contribution Margin( A*B)	1.15385	0.41026	0.22051	1.78462

Break even point= Fixed cost /  Weighted Average Contriution Margin Ratio

=200,000/1.78

=112,360

2) Total Contribution marigin @ 200,000 units

= no. of units* weighted contribution

=200000*1.78

=356,000

Income = contribution - Fixed cost

= 356,000-200,000

=156,000