4 $35 1 Problem 2: 2 Scenario: You are examining 2 lines of business: Product D (for "Delicious") and Product T (for "Tasty'). 3 Your company can only keep manufacturing one of the 2 lines, so you must choose the one that you feel is best to keep making. You are given the following information pertaining to these 2 product lines (note: these s's are on a 'per unit' basis): Product D: Product 7 Contribution Margin Per Unit $30 $45 Selling Price Per Unit $40 $75 Target Profit Per Unit $25 10 Fixed Expenses Per Unit $6 $9 12. Using the following 3 formulas, calculate the CM Ratio Per Unit, Unit Sales to obtain Target Profit, and Unit Sales to Break Even. 13 Then, indicate which of the 2 products you think is more favorable in this category, as well as your overall product choice. 14 Hint When doing this, please consider that for some of these formules, the balantaway better che, please consider what must be sold for each product to reach the target profit or break even point) 15 Formulas: 16 1. CM Ratio - Unit Contribution Margin/Unit Selling Price 2. Unit Sales to obtain Target Profit - Target Profit+ Fixed Expenses ! Unit Contribution Margin 18 3. Unit Sales to Break Even=Fixed Expenses/Unit Contribution Margin 19 (Show computations below, then use 'A' or 'B' for the boxes at the right) e 'Favorable in this categ 21 For Product 'D' (Delicious): For Product T (Tasty): Poble 2 Cont Volume Prot 11 20 Proton 20 (Show computations below, then use 'A' or 'B' for the boxes at the right) For Product 'D' (Delicious): For Product 'T (Tasty): e 'Favorable in this categ -> 21 22 23 24 25 26 27 lore 'Favorable Overa 2 5 POINT BONUS: Explain 'why' (5 sentences based on what we've learned in class about how different products contribute differently to profits/losses); 20 30 31 32 33 51 35 36 37