4 1 CD6 EXCEL Tutorial 2 3 CURRENT DESIGNS 4 Current Designs manufactures two different types of kayak, rotomolded kayaks and composite kayaks. 5 The following information is available for each product line. Sales price/unit Variable costs/unit Rotomolded $950 $570 Composite $2,000 $1,340 11 The company's fixed costs are $820,000. An analysis of the sales mix identifies that rotomolded kayaks 12 make up 80% of the total units sold. 13 20 14 Instructions 15 (a) Determine the welghted-average unit contribution margin for Current Designs 16(b) Determine the break-even points in units for Current Designs and identify how many units of each 17 type of kayak will be sold at the break-even point (Round to the nearest whole number.) 18 (C) Assume that the sales mix changes, and rotomolded kayaks now make up 70% of total units sold. Calculate the total number of units that would need to be sold to earn a net income of $2,000,000 and identify how many units of each type of kayak will be sold at this level of income. (Round to the nearest whole number) 22 (d) Assume that Current Designs will have sales of $3,000,000 with two-thirds of the sales dollars in 23 rotomolded kayaks and one-third of the sales dollars in composite kayaks. Assuming $680,000 of foed costs are a located to the rotomolded kayaks and $160,000 to the composite kayaks, prepare a CVP income statement for each product line. 26 (e) Using the information in part (d), calculate the degree of operating leverage for each product line and interpret your findings. (Round to two decimal places.) 25 27 32(a) Determine the weighted average unit contribution margin for Current Designs 6:1 6:3 6:17 CD6 A G H 32 (a) Determine the weighted average unit contribution margin for Current Designs Rolomolded Kayaks Value Value Composite Kayaks Value Value Sales price/unit Variable costs/unit Unit Contribution margin (UCM) Product mix Weighted Average UCM 38 Value Value 42 (b) Determine the break-even points in units for Current Designs and identify how many units of each type of kayak wil be sold at the break-even point. (Round to the nearest whole number.) 45 46 Fixed costs Weighted Average UCM Breakeven units Rotomolded Kayaks Composite Kayaks Breakeven unit distribution 53(c) Assume that the sales mix changes, and rotomolded kayaks now make up 70% of total units sold. Calculate the total number of units that would need to be sold to earn a net income of $2,000,000 and identify how many units of each type of kayak will be sold at this level of income. (Round to the nearest whole number.) Target net income in units: Rotomolded Kayaks Composite Kayaks F66 .17 1 .6 File Home Insert Page Layout Formulas Data Review View Help DYMO Label QuickBooks H12 4 58 - 1 X f Target net income in units: ENFLO GHL Rotomolded Kayaks Value Value ? Value ? Composite Kayaks Value Value Sales price/unit Variable costs/unit Unit Contribution margin (UCM) Product mix Weighted Average UCM Value Value Value Value Value Required sales in units: Total fixed costs Target net income Total required sales (dollars) Weighted Average UCM Required sales in units 74 (d) Assume that Current Designs will have sales of $3,000,000 with two-thirds of the sales dollars in rotomolded kayaks and one-third of the sales dollars in composite kayaks. Assuming $660,000 of fixed costs are allocated to the rotomolded kayaks and $160,000 to the composite kayaks, prepare a CVP income statement for each product line. Rotomolded Kayaks Value Value Composite Kayaks Value Value Sales Variable Costs Contribution Margin Fixed Costs Net Income 83 Value Value 87 Using the information in part (d), calculate the degree of operating leverage for each product line and 66- 1 6 -3 E6-17 CD-6 Ready Type here to search O How To ex 4 Contribution Margin Fixed Costs Net Income Value Value 87 (e ) Using the information in part (d), calculate the degree of operating leverage for each product line and interpret your findings. (Round to two decimal places.) Rotomolded Kayaks Contribution Margin(a) Value Net Income (b) Value Degree of Operating Leverage (a -L ? Composite Kayaks Value Value Interpretation of findings: 108 1091. Assume that variable cost per unit for the rotomolded kayak and composite kayak changed to $610 and 110 $1,400 respectively. Show impact of these changes on each of the scenarios provided. 111) 112) 2 6-156-3E6-17 CD-6