Manatoah Manufacturing produces 3 models of window air conditioners: model 101, model 201, and model 301. The sales price and variable costs for these three models are as follows:
Product | Sales Price per Unit |
Variable Cost per Unit |
Model 101 | $280 | $185 |
Model 201 | 350 | 215 |
Model 301 | 405 | 240 |
The current product mix is 4:3:2. The three models share total fixed costs of $334,500.
A. Calculate the sales price per composite unit.
Sales price $ per composite unit
B. What is the contribution margin per composite unit?
Contribution margin $ per composite unit
C. Calculate Manatoah’s break-even point in both dollars and units.
Break-even point in dollars $
Break-even point in units units
D. Using an income statement format, prove that this is the break-even point. If an amount is zero, enter "0".
Income Statement | |
Sales | |
Model 101 | $ |
Model 201 | |
Model 301 | |
Total Sales | $ |
Variable Costs | |
Model 101 | $ |
Model 201 | |
Model 301 | |
Total Variable Costs | $ |
Contribution Margin | $ |
Fixed Costs | |
Net Income | $ |
A.
Price per composite unit = ($280 X 4) + ($350 X 3) + ($405 X 2) = $2,980
B.
Contribution margin per composite unit:
= $2,980 - ($185 X 4) + ($215 X 3) + ($240 X 2)
= $1,115
C.
Contribution margin ratio = $1,115 / $2,980 = 37.42%
Breakeven point in dollars = $334,500 / 37.42% = $894,000
Breakeven point in units = $334,500 X 9 / $1,115 = 2,700 units
D.
Sales | |
Model 101 (2,700 X $280 X 4/9) | $336,000 |
Model 201 (2,700 X $350 X 3/9) | $315,000 |
Model 301 (2,700 X $405 X 2/9) | $243,000 |
Total sales | $894,000 |
Variable costs | |
Model 101 (2,700 X $185 X 4/9) | $222,000 |
Model 201 (2,700 X $215 X 3/9) | $193,500 |
Mode 301 (2,700 X $240 X 2/9) | $144,000 |
Total variable costs | $559,500 |
Contribution margin | $334,500 |
Fixed costs | $334,500 |
Net income | $0 |
Get Answers For Free
Most questions answered within 1 hours.