Question

Tiago makes three models of camera lens. Its product mix and contribution margin per unit follow:...

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.)

Homework Answers

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
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