Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

could you please provide a detailed explanation with calculation mainly for part B and C Puleya S A of Madrid Spain, manufactures and sells 2

could you please provide a detailed explanation with calculation mainly for part B and C

image text in transcribed

Puleya S A of Madrid Spain, manufactures and sells 2 products of luxury finished cutlery Alvaro and Bazan. Current monthly sales and cost information is provided below for each case:- Fixed expenses are $66,000 per month. Required: a) Based on the current sales mix, compute the break-even point of the company, and determine the current margin of safety. Also, prepare a contribution income statement in terms of dollars and Contribution margin percentage for each product and the total company sales. [4 marks] b) The company has just introduced a new product, Cano, that the company plans to sell for $800 per case. The variable cost of production is expected to be $600, and expectations are for sales of 40 cases per month. The fixed expenses are not expected to increase. Compute the company's new break-even point as a whole and prepare a new contribution margin income statement for each product and the total company sales. [ 3 marks] c) Explain (briefly) to the CEO why the break-eren point has changed, despite no change in fixed expenses for the company and the addition of new product which has increased total contribution margin. [ 3 marks]

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions