Question
its not 18750 or 3582 units Ans.1 Break even point in unit sales = Direct fixed cost / Contribution margin per unit Regular 1200000 /
its not 18750 or 3582 units
Ans.1 | Break even point in unit sales = Direct fixed cost / Contribution margin per unit | ||||
Regular | 1200000 / 64 | 18750 | units | ||
Deluxe | 960000 / 268 | 3582 | units | ||
*Contribution margin per unit = Contribution margin / No. of units sold | |||||
Regular | 6400000 / 100000 | 64 | |||
Deluxe | 5360000 / 20000 | 268 |
and
its not 47468.75 or 2267.16 units
sales mix ratio = 100000 : 20000 = 5:1
contribution margin ratio :-
regular = 6400000/16000000 = 40%
Deluxe = 5360000/13400000 = 40%
Weighted average cont margin ratio (Combined) = [(40*5/6) + (40*1/6)] / 6 = 40%
total fixed cost = 1485600(Coomon) + 2160000 (Individual) = 3645600
Break even total sales = 3645600/40% = 9114000
Regular = 9114000*5/6 = 7595000
price of one regular unit = 160
break even units = 7595000/160 = 47468.75
Deluxe = 9114000*1/6 = 1519000
price of one unit = 670
break even units = 1519000/670 = 2267.16
CVP Analysis of Multiple Products Steinberg Company produces commercial printers. One is the regular model, a basic model that is designed to copy and print in black and white. Another model, the deluxe model, is a color printer- scanner-copier. For the coming year, Steinberg expects to sell 100,000 regular models and 20,000 deluxe models. A segmented income statement for the two products is as follows: Regular Model $16,000,000 9,600,000 $6,400,000 1,200,000 $5,200,000 Deluxe Model $13,400,000 8,040,000 Total Sales $29,400,000 17,640,000 $5,360,000 $11,760,000 2,160,000 $9,600,000 1,485,600 $8,114,400 Less: Variable costs Contribution margin Less: Direct fixed costs 960,000 Segment margin $4,400,000 Less: Common fixed costs Operating income Required: 1. Compute the number of regular models and deluxe models that must be sold to break even. Round your answers to the nearest whole unit. Regular models Deluxe models 2. Using information only from the total column of the income statement, compute the sales revenue that must be generated for the company to break even. Round the contribution margin ratio to four decimal places. Use the rounded value in the subsequent computation. (Express as a decimal-based amount rather than a whole percentage.) Round the amount of revenue to the nearest dollar Contribution margin ratio Revenue units units 0.40 9,114,000
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