Question
I am having problem figuring the next of the questions out. Thanks for you help, here is the questions: Hi-Tech Incorporated produces two different products
I am having problem figuring the next of the questions out. Thanks for you help, here is the questions:
Hi-Tech Incorporated produces two different products with the following monthly data:
Cell GPS Total
Selling price per unit 100 400
Variable cost per unit 40 240
Expected unit sales 21,000 9,000 30,000
Sales mix 70% 30% 100%
Fixed costs $ 1,800,000
Assume the sales mix remains the same at all levels of sales.
Required:
a. Calculate the weighted average contribution margin per unit.
If we look at this question, we have to figure the average margin by, margin per unit multiplied by the sale mix of the cell, plus, contribution margin per unit of GPS multiplied by the sales mix of GPS(Heisinger & Hoyle, 2012). That will give us the answer of:
(100 - 40) x 70% + (400 - 240) x 30% =90Weighted Average Contribution Margin per unit
b. How many units in total must be sold to break even?
The breakeven is found by, fixed cost divided with the weighted average contribution(Heisinger & Hoyle, 2012). Which will look like this:
1,800,000/90 =20,000Totals Break Margin
c. How many units of each product must be sold to break even?
d. How many units in total must be sold to earn a monthly profit of $180,000?
e. How many units of each product must be sold to earn a monthly profit of $180,000?
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