1. Russell Corporation sells three different models of mosquito zapper. Model A12 sells for $65 and has variable costs of $55. Model B22 sells for $150 and has variable costs of $110. Model C124 sells for $425 and has variable costs of $325. The sales mix of the three models is as follows: A12, 55%; B22, 25%; and C124, 20%.

a). What is the weighted-average unit contribution margin? (Round answer to 2 decimal places, e.g. 15.25.)

b). If the companys fixed costs are $262,700, how many units of each model must the company sell in order to break even?

Units of A12			units
Units of B22			units
Units of C124			units
Break-even in units total			units

2. Kirkland Video Games Inc. is developing a new video game. It is the most sophisticated game on the market. It sells the video game for $285 per copy. Variable costs to produce and sell the video game amount to $70 per copy. Fixed costs amount to $453,650. The company anticipates selling 400 copies of the game per month. The companys policy is to stop producing the video game as soon as a competitor comes out with a more sophisticated version.

a). Calculate the amount of operating income the company will earn if it takes 11 months for a competitor to produce a more sophisticated version of the video game.

b). Calculate how many units of the video game the company will have to sell in order to break even.

c). If the company wishes to earn $26,350 over the products life, calculate the selling price of the video game if a competitor introduces a more sophisticated version of the video game in 4 months. Assume that unit sales are 400 copies per month. (Round answer to 2 decimal places, e.g. 15.25.)

3. The Richibouctou Inn is trying to determine its break-even point. The inn has 71 rooms available that are rented at $60 a night. Operating costs are as follows:

Salaries		$9,240	per month		Maintenance		$480	per month
Utilities		$1,930	per month		Housekeeping service		$6	per room
Depreciation		$1,310	per month

Other costs

$24

per room

a). Determine the inns break-even point in the number of rented rooms per month and dollars.

Break-even point			rooms
Break-even point		$

b). If the inn plans on renting 32 rooms per day (assuming a 30-day month), what is the monthly margin of safety in dollars and the margin of safety ratio?

Monthly margin of safety		$
Margin of safety ratio			%