Chapter 6 Homework

Question 9 of 9

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Current Designs manufactures two different types of kayaks, rotomolded kayaks and composite kayaks. The following information is available for each product line.

		Rotomolded		Composite
Unit selling price		$700		$2,000
Unit variable costs		$420		$1,340

The company's fixed costs are $608,760. An analysis of the sales mix identifies that rotomolded kayaks make up 80% of the total units sold.

(a)

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Your answer is correct.

Determine the weighted-average unit contribution margin for Current Designs.

Weighted-average unit contribution margin

$enter the weighted-average unit contribution margin in dollars

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(b)

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Determine the break-even point in sales units for Current Designs and identify how many units of each type of kayak will be sold at the break-even point.

Break-even sales

enter the break-even sales in number of units

units

		Rotomolded Kayaks		Composite Kayaks
Break-even sales distribution		enter a number of units	units		enter a number of units	units

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(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 $1,479,440 and identify how many units of each type of kayak will be sold at this level of income.

Required sales

enter the required sales in number of units

units

		Rotomolded Kayaks		Composite Kayaks
Required sales distribution		enter a number of units	units		enter a number of units	units

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(d)

Assume that Current Designs will have sales of $2,100,000 with two-thirds of the sales dollars in rotomolded kayaks and one-third of the sales dollars in composite kayaks. Assuming $488,000 of fixed costs are allocated to the rotomolded kayaks and $120,760 to the composite kayaks, prepare a CVP income statement for each product line.

		Rotomolded Kayaks		Composite Kayaks
select an item Administrative ExpensesContribution MarginFixed CostsGross ProfitNet Income / (Loss)SalesSelling ExpensesVariable Costs		$enter a dollar amount		$enter a dollar amount
select an item Administrative ExpensesContribution MarginFixed CostsGross ProfitNet Income / (Loss)SalesSelling ExpensesVariable Costs		enter a dollar amount		enter a dollar amount
select a summarizing line for the first part Administrative ExpensesContribution MarginFixed CostsGross ProfitNet Income / (Loss)SalesSelling ExpensesVariable Costs		enter a total amount for the first part		enter a total amount for the first part
select an item Administrative ExpensesContribution MarginFixed CostsGross ProfitNet Income / (Loss)SalesSelling ExpensesVariable Costs		enter a dollar amount		enter a dollar amount
select a closing name for this statement Administrative ExpensesContribution MarginFixed CostsGross ProfitNet Income / (Loss)SalesSelling ExpensesVariable Costs		$enter a total net income or loss amount		$enter a total net income or loss amount

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(e1)

Calculate the degree of operating leverage for each product line. (Round answers to 2 decimal places, e.g. 52.75.)

		Rotomolded Kayaks		Composite Kayaks
Degree of operating leverage		enter a value rounded to 2 decimal places		enter a value rounded to 2 decimal places

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Chapter 6 Homework

Question 9 of 9

1 / 5

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Current Attempt in Progress

Current Designs manufactures two different types of kayaks, rotomolded kayaks and composite kayaks. The following information is available for each product line.

		Rotomolded		Composite
Unit selling price		$700		$2,000
Unit variable costs		$420		$1,340

The company's fixed costs are $608,760. An analysis of the sales mix identifies that rotomolded kayaks make up 80% of the total units sold.

(a)

Correct answer icon

Your answer is correct.

Determine the weighted-average unit contribution margin for Current Designs.

Weighted-average unit contribution margin

$enter the weighted-average unit contribution margin in dollars

eTextbook and Media

Attempts: 1 of 3 used

Using multiple attempts will impact your score.

10% score reduction after attempt 2

(b)

Incorrect answer icon

Your answer is incorrect.

Determine the break-even point in sales units for Current Designs and identify how many units of each type of kayak will be sold at the break-even point.

Break-even sales

enter the break-even sales in number of units

units

		Rotomolded Kayaks		Composite Kayaks
Break-even sales distribution		enter a number of units	units		enter a number of units	units

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Attempts: 1 of 3 used

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(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 $1,479,440 and identify how many units of each type of kayak will be sold at this level of income.

Required sales

enter the required sales in number of units

units

		Rotomolded Kayaks		Composite Kayaks
Required sales distribution		enter a number of units	units		enter a number of units	units

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Save for Later

Last saved 10 seconds ago.

Saved work will be auto-submitted on the due date. Auto-submission can take up to 10 minutes.

Attempts: 0 of 3 used

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10% score reduction after attempt 2

(d)

Assume that Current Designs will have sales of $2,100,000 with two-thirds of the sales dollars in rotomolded kayaks and one-third of the sales dollars in composite kayaks. Assuming $488,000 of fixed costs are allocated to the rotomolded kayaks and $120,760 to the composite kayaks, prepare a CVP income statement for each product line.

		Rotomolded Kayaks		Composite Kayaks
select an item Administrative ExpensesContribution MarginFixed CostsGross ProfitNet Income / (Loss)SalesSelling ExpensesVariable Costs		$enter a dollar amount		$enter a dollar amount
select an item Administrative ExpensesContribution MarginFixed CostsGross ProfitNet Income / (Loss)SalesSelling ExpensesVariable Costs		enter a dollar amount		enter a dollar amount
select a summarizing line for the first part Administrative ExpensesContribution MarginFixed CostsGross ProfitNet Income / (Loss)SalesSelling ExpensesVariable Costs		enter a total amount for the first part		enter a total amount for the first part
select an item Administrative ExpensesContribution MarginFixed CostsGross ProfitNet Income / (Loss)SalesSelling ExpensesVariable Costs		enter a dollar amount		enter a dollar amount
select a closing name for this statement Administrative ExpensesContribution MarginFixed CostsGross ProfitNet Income / (Loss)SalesSelling ExpensesVariable Costs		$enter a total net income or loss amount		$enter a total net income or loss amount

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(e1)

Calculate the degree of operating leverage for each product line. (Round answers to 2 decimal places, e.g. 52.75.)

		Rotomolded Kayaks		Composite Kayaks
Degree of operating leverage		enter a value rounded to 2 decimal places		enter a value rounded to 2 decimal places

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Attempts: 0 of 3 used