CD6 EXCEL Tutorial CURRENT DESIGNS The following information is available for each product line. urrent Designs manufactures two different types of kayak, rotomolded kayaks and composite kayaks. Rotomolded Sales price/unit Variable costs/unit $950 $570 Composite $2,000 $1,340 The company's fixed costs are $820,000. An analysis of the sales mix identifies tha make up 80% of the total units sold t rotomolded kayaks Instructions (a) D etermine the weighted-average unit contribution margin for Current Designs. (b) Determine the break-even points in type of kayak will be sold at the break-even point. (Round to the nearest whole number.) units for Current Designs and identify how many units of each (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.) 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. (d) 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.) l(a) Determine the weighted-average unit contribution margin for Current Designs Composite Kayaks Value Value Rotomolded Kayaks Sales price/unit Variable costs/unit Unit Contribution margin (UCM) Product mix Weighted Average UCM Value Value Value Value (b) Determine the break-even points in units for Current Designs and identify how many units of each type of kayak Will be sold at the break-even point. (Round to the nearest whole number.) Fixed costs Weighted Average UCM Value Value Breakeven units Rotomolded Kayaks Composite Kayaks Breakeven unit distribution les mix changes, and rotomolded kayaks now make up 70% of total units sold. of $2,000,000 (c ) Assume that the sa Calculate the total number of units that would need to be sold to earn a net income and identify how many units of each type of kayak will be sold at this level of income. nearest whole number.) (Round to the Target net income in units Rotomolded Kayaks Value Value Composite Kayaks Value Value Sales price/unit Variable costs/unit Unit Contribution margin (UCM) Product mix Weighted Average UCM Value Value Required sales in units: Total fixed costs Target net income Total required sales (dollars) Weighted Average UCM Required sales in units Value Value Value Value (d) Assume that Current Designs will have sales of $3,000,000 with two-thirds of the sales dolsf fixed rotomolded kayaks and one-third of the sales dollars in composite kayaks. Assuming $660,000 of fixed pare a CVP costs are allocated to the rotomolded kayaks and $160,000 to the composite kayaks, pre income statement for each product line. Rotomolded Kayaks Value Value Composite Kayaks Value Value Sales Variable Costs Contribution Margin Fixed Costs Net Income Value Value (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 Value Value Composite Kayaks Value Value Contribution Margin (a) Net Income (b) Degree of Operating Leverage (a b Interpretation of findings: After you have completed CD6, consider the following additional questi 1. Assume that variable cost per unit for the rotomolded kayak and composite kayak changed to $610 and $1,40 o respectively. Show impact of these changes on each of the scenarios provided
