Limitless Labs offers three basic drug-testing services for professional athletes. The budget for the 2^nd Quarter of 2023 is shown below.

Variable costs include the labor costs of the medical technicians and consumable materials for testing. Fixed costs total $377,000 per year, consisting of equipment depreciation (direct fixed costs $197,000), and building depreciation and administration costs (common fixed costs $180,000).

A basic test is a routine test administered. A retest is given if there is concern about the results of the first test, particularly if the test indicates that the athlete is positive for drugs that are on the banned list. Retests are not done by the laboratory that performed the basic test but instead are conducted by a different Lab in the network. A priority test is the laboratorys code for a high-profile case. This might be a test of a famous athlete and/or a test that might be challenged in court. The laboratory does extra work and uses expert technicians to ensure the accuracy of priority tests. Limitless Labs is subject to a 21% tax rate.

Treat each of the following questions independently and document your work.

1.Determine the breakeven point, in units, for the Basic Tests line of service.

2.Determine the number of Retests that would need to be administered for that service line to generate $10,000 segment margin.

3.Determine the budgeted weighted average contribution margin per unit (WACM/unit) and weighted average contribution margin ratio (WACM%) for Limitless Labs.

4.Determine the budgeted sales mix based on volume and the budgeted sales mix based on revenue.

5.Assume the actual sales mix remains the same as budgeted in the quarter; determine the sales revenue (in total and by product line) necessary for the lab to achieve $100,000 after-tax profit.

6.Limitless Labs is considering increasing its advertising for the quarter by adding $15,000 of advertising expenses. Historically, sales volume increases uniformly across the product lines by 2% for each $5,000 of additional advertising budget. Considering the impact on Operating Income, is the additional advertising worthwhile?

Last time I submitted it, it was wrong and the number did not match the number on the table.

Limitless Labs Budgeted Contribution Margin Analysis - Quarter 2, 2023