Flag After taking business classes, Jake, an avid dog-lover, decided to start selling unique pet supplies at trade shows. He has two products: Product 1: "Launch-it"- a tennis ball thrower that will sell for $10. Product 2: "Treat-time"- an automatic treat dispenser that releases a treat when the dog places his paw on the pedal. The treat dispenser will sell for $30. Costs: Jake has hired an employee to work the trade show booths. The work contract is $1,000 per month plus a commission equal to 10% of revenue. Jake will also spend $500 per month on trade-show entry fees. Jake is purchasing the products from a supplier in Mexico. Launch-its cost $1 each; Treat-times cost $7 each. Shipping and handling on the Launch-its will cost $2 each; Shipping and handling on the Treat-times, which are heavier, will cost $8 each. The shipping and handling costs will be paid by Jake, not the customer. Assume Jake expects to sell 200 Launch-its and 100 Treat-times during his first month of operations (June). Jake's financial goal is to earn an operating income of $8,000 per month. He believes volume may grow at a rate of 5% a month. Determine Variable cost per unit for products #1 and #2, total variable cost per unit for products #1 and #2, monthly volumes, fixed cost per month, and total fixed cost per month also determine the target profit volume in units as well as in sales revenue for both products

5) Use the WACM/unit to calculate the TOTAL number of units needed to breakeven (TOTAL column in the first gray box). THEN, calculate the number of EACH type of product needed to breakeven. Finally, calculate the sales revenue associated with this volume for EACH product, and then the sales revenue to breakeven in total.

Check figures: B/E Product #1 = 125; B/E Product #2= 63

6) Use the WACM/unit to calculate the total number of units needed to achieve Jake's target profit (TOTAL column in the second gray box). THEN, calculate the number of EACH type of product needed to achieve the target profit. Finally, calculate sales revenue associated with this volume for EACH product, and then the sales revenue in total.

Check figures: B/E Product #1 =792; B/E Product #2= 396

7) Calculate the MOS using June sales as the expected sales (purple box). Calculate the MOS in terms of sales revenue and as a percentage. Also calculate the current operating leverage factor (round to the nearest 2 decimal places) and use it to determine the expected percentage change in operating income stemming from an expected change in sales volume.

Check figures: MOS%= 38%; Operating leverage factor= 2.67

Launch-it $ ASSUMPTIONS Product #1: Sales price per unit Variable costs per unit: 6.00 6096 Jake's Pet Supplies Pro Forma Contribution Margin Income Statement For the month ending June 30 Launch-it $ 10.00 $ 1.00 $ 2.00 $ 1.00 Product #1 Unit CM CM 96 Breakeven point: in units in sales revenue $ $ 250.00 2,500.00 S $ Product #1 Product #2 $ 2,000.00 $ 3,000 $ $ $ 800.00 $ 1,800.00 $ $ $ 1,200.00 $ 1,200.00 $ $ $ Total variable cost per unit Total 5,000.00 2,600.00 2,400.00 1,500.00 900.00 Sales Revenue Variable cost Contribtion margin Fixed costs operating income 4.00 Target profit volume: in units $ $ 2,375.00 23,750.00 Monthly volume 200 in sales revenue WACM 96 4894 Product #2: Sales price per unit Variable costs per unit: Treat-time $ 30.00 s 7.00 $ S 8.00 3 Treat-time $ $ 12.00 0.40 Product #2 Unit CM CM 96 Breakeven point: -in units in sales revenue S 125 3,750 Calculation of Weighted average CM per unit Product #1 Product #2 $ 6.00 $ 12.00 $ 2001 100 S 1,200.00 $ 1,200.00 $ Total 18.00 300 2,400.00 Total variable cost per unit S CM/unit Monthly CM/unit 18.00 $ Monthly volume 100 Target profit volume in units $ $ 8 WACM/unit / 528 15,833.33 Fixed costs per month: -in sales revenue $ 500.00 $ 1,000.00 Total fixed costs per month $ 1,500.00 Product #1 Product #2 Total Multiproduct Breakeven point: in units Sales revenue at breakeven S Target profit per month $ 8,000.00 $ S Expected change in volume (96) 596 Product #1 Product #2 Total Multiproduct Target profit point: in units Sales revenue at target profit 0 o Margin of Safety (in ) Margin of Safety Operating Leverage Factor Expected % change in operating income (5 Launch-it $ ASSUMPTIONS Product #1: Sales price per unit Variable costs per unit: 6.00 6096 Jake's Pet Supplies Pro Forma Contribution Margin Income Statement For the month ending June 30 Launch-it $ 10.00 $ 1.00 $ 2.00 $ 1.00 Product #1 Unit CM CM 96 Breakeven point: in units in sales revenue $ $ 250.00 2,500.00 S $ Product #1 Product #2 $ 2,000.00 $ 3,000 $ $ $ 800.00 $ 1,800.00 $ $ $ 1,200.00 $ 1,200.00 $ $ $ Total variable cost per unit Total 5,000.00 2,600.00 2,400.00 1,500.00 900.00 Sales Revenue Variable cost Contribtion margin Fixed costs operating income 4.00 Target profit volume: in units $ $ 2,375.00 23,750.00 Monthly volume 200 in sales revenue WACM 96 4894 Product #2: Sales price per unit Variable costs per unit: Treat-time $ 30.00 s 7.00 $ S 8.00 3 Treat-time $ $ 12.00 0.40 Product #2 Unit CM CM 96 Breakeven point: -in units in sales revenue S 125 3,750 Calculation of Weighted average CM per unit Product #1 Product #2 $ 6.00 $ 12.00 $ 2001 100 S 1,200.00 $ 1,200.00 $ Total 18.00 300 2,400.00 Total variable cost per unit S CM/unit Monthly CM/unit 18.00 $ Monthly volume 100 Target profit volume in units $ $ 8 WACM/unit / 528 15,833.33 Fixed costs per month: -in sales revenue $ 500.00 $ 1,000.00 Total fixed costs per month $ 1,500.00 Product #1 Product #2 Total Multiproduct Breakeven point: in units Sales revenue at breakeven S Target profit per month $ 8,000.00 $ S Expected change in volume (96) 596 Product #1 Product #2 Total Multiproduct Target profit point: in units Sales revenue at target profit 0 o Margin of Safety (in ) Margin of Safety Operating Leverage Factor Expected % change in operating income (5