2. Cost-Volume-Profit (CVP) Analysis

Wax Melt is a manufacturer of natural based candles that are provided in clear glass jars. The candles come in three different scents being Pear and Lime, Vanilla, and Patchouli.

Wax Melt is expected to have the following fixed costs:

Administrative expenses of $2,200 per quarter

Advertising expense of $500 per month

Utilities expense of $2,050 per quarter

Maintenance costs of $10,800 per year

The sales data are expected to be as follows:

	Pear and Lime	Vanilla	Patchouli
Annual volume in units (32,000 total units)	17,000	3,000	12,000
Selling price per unit $	28	40	22
Variable cost per unit $	24	26	14

Your team has been asked to help Wax Melt understand their financial performance in terms of Cost, Volume, Profit (CVP) analysis. Please calculate the following and ensure that you show your workings as evidence of how you have calculated these answers:

a) Weighted average contribution margin (WACM) for the multiple products. (Please use

two decimal places for calculations) (1.5 marks)

b) Break-even point in units for the multiple products. Round to whole number. (1 mark)

c) How many of each product would they need to sell to break even? (1 mark)