Question

Tiago makes three models of camera lens. Its product mix and contribution margin per unit follow: Percentage of Unit sales Contribution Margin per unit Lens A 23 % $ 38 Lens B 36 30 Lens C 41 43 Required:

1. Determine the weighted-average contribution margin per unit. (Round your intermediate calculations and final answer to 2 decimal places.)

2. Determine the number of units of each product that Tiago must sell to break even if fixed costs are $181,000. (Round intermediate calculations and final answers to the nearest whole number.)

3. Determine how many units of each product must be sold to generate a profit of $80,000. (Round intermediate calculations and final answers to the nearest whole number.)

Answer 1

1)	Weighted average contribution = 38*23%+30*36%+43*41% =	$         37.17
2)	Number of units of the combined product for break even = Fixed costs/Weighted average CM = 181000/37.17	4870	Units
	Break up:
	Lens A = 4870*23% =	1120	Units
	Lens B = 4870*36% =	1753	Units
	Lens A = 4870*41% =	1997	Units
	Total	4870	Units
3)	Number of units of the combined product for profit of $80000 = (Fixed costs+Desired proti)/Weighted average CM = (181000+80000)/37.17 =	7022	Units
	Break up:
	Lens A = 7022*23% =	1615	Units
	Lens B = 7022*36% =	2528	Units
	Lens A = 7022*41% =	2879	Units
	Total	7022	Units