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Attached is the question: Question 5 [11 marks] Smarty Inc. Ltd produces two different products with the following monthly data: P1 P2 Total Selling price
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Question 5 [11 marks] Smarty Inc. Ltd produces two different products with the following monthly data: P1 P2 Total Selling price per unit $100 $12 Variable cost per unit 5 60 $ 3 Expected unit sales 21,000 14,000 35,000 Sales mix 50 percent 40 percent 100 percent Fixed costs $250,000 Assume the sales mix remains the same at all levels of sales. Required: a] Calculate the weighted average contribution margin per unit. {1 mark] b] How many units in total must be sold to break even? [1 mark] c] How many units of each product must be sold to break even? [1 mark] d] How many units of each product must be sold to earn a monthly profit of $100,000? [3 marks] e} Prepare a contribution margin income statement for the month. [3 marks] f] If the sales mix shifts more toward the P1 product than the P2 product, would the breakeven point 'In units increase or decrease? Explain. [Detail calculations are not necessary but may be helpful in confirming your answer.] [2 marks] SHOW YOUR WORKING ANSWER: lIStep by Step Solution
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