Question
Generic Company sells two types of blenders: standard and deluxe. Data on the two blenders is given below. Standard per Unit Standard at 52,000 units
Generic Company sells two types of blenders: standard and deluxe. Data on the two blenders is given below. |
|
| Standard per Unit | Standard at 52,000 units | Deluxe per unit | Deluxe at 35,000 units | Total | Ratio | |||||
Sales | $80 | $4,160,000 | $400 | $14,000,000 | $18,160,000 | 100.00% |
| |||||
Variable expenses | 60 | 3,120,000 | 280 | 9,800,000 | 12,920,000 | 71.1% |
| |||||
Contribution margin | $20 | $1,040,000 | $120 | $4,200,000 | $5,240,000 | 28.9% |
| |||||
Total Fixed expenses | 5,500,000 |
| ||||||||||
Net operating income (loss) | ($260,000) |
| ||||||||||
Required: Show your work. |
| |
a. Calculate the overall contribution margin ratio for the company. Round percentages to one decimal place. | ||
b. What is the company's overall break-even point in dollar sales? Round up to the nearest whole dollar. | ||
c. If the company increases the price on the Standard product to $100 per unit with no change in the per unit variable expenses. However, the sales volume decreases to 40,000 units. What happens to the company's overall Net Operating Income? |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started