LoCal Company sells two products, M1O at $44 per unit and M2 at $66 per unit. The variable costs are $40 and $60 respectively. For the coming year, Gray predicts the sale of 15,000 units of M1O and 45,000 units of M2." What is the weighted average contribution margin? $5.50 What page number in the textbook has your model to answer this question? 965 Using the area provided below, use the textbook model and compute the answer. M10 M2 Total Sales Price per unit $44.00 $66.00 Variable Cost per unit -40 -60 Contribution Margin per unit $4.00 $6.00 Sales Mix in units x1 x3 4 Contribution Margin $4.00 $18.00 $22.00 Weighted-average contribution margin per unit (22/4) $5.50 EC2 Montoya Trucking is considering replacing a tractor that is presently used in its over-the-road freight services. The following information is available: Old Tractor Replacement Tractor Original cost $35,000 $90,000 Remaining useful life in miles 500,000 1,000,000 Current miles 500,000 0 Book value $17,500 Current disposal value in cash $8,000 Future disposal value in cash at end of useful life $0 $0 Operating cost per mile $3.00 $1.50 For a tractor replacement decision which of the information provided in the table is a sunk cost? In the Answer cell type the row title(s). Original Cost In the space below compute the contribution margin for the next 500,000 miles for both tractors. Old Tractor New Tractor Sales Revenue 25,500 0 Variable costs 1,500,000 750,000 Contribution Margin -1,474,500 -750,000 Based on your computations, what do you recommend that Montoya do? Keep the old or buy the new? I would buy the new tractor as lonf as I can make more money than the contribution margin in the long run the new tractor will cost you less to run. Why? In the long run the old tractor is going to cost you to much to keep for those last 500,000 miles of its life. EC3 Madrid Manufacturing is considering the manufacture of a new Perm-A-Roof. Madrid was hoping to sell the product for $504 per 80 pound bucket with an estimated the total cost per 80 pound bucket to be $360. What is the markup percentage? 504/360=1.4= 40% Markup Percentage Madrid conducted market research and found out that the market is only willing to pay $462 per 80 pound bucket of Perm-A-Roof. In the space below, use the target costing approach to compute the total cost per 80 pound bucket that Perm-A-Roof would have to achieve if Madrid wants to achieve the same markup on total cost that was used in their initial estimates of cost and selling price? Target Sale Price (Is provided for me) 462 per bucket Less Desired Profit (462*40%)=184.8 Target Cost Per Bucket 462-184.8=277.20 per bucket to achieve the 40% markup on the buckets. EC4 Alpha Company's contribution margin income statement for March is as follows: Sales (3,885 units) $388,500 Variable expenses $233,100 Contribution margin $155,400 Fixed expenses $65,000 Operating income $ 90,400 What is the contribution margin percentage? 155,400/388,500=.4=40% A 10% increase in sales would have resulted in what percentage increase in operating income during March? About 43% to $129,250 How much is the margin of safety for March? 388,500-65,000=$3,235 Units What is the breakeven point in units? 65,000/.40= $162,500/100=1,625 units EC5 Morning Start Company has only three product lines: A, B, and C. The following information is available: A B C Sales $60,000 $38,000 $26,000 Variable costs $36,000 $18,000 $12,000 Contribution margin $24,000 $20,000 $14,000 Fixed expenses $12,000 $15,000 $16,000 Operating income (loss) $12,000 $ 5,000 $ (2,000) "Morning Start Company is thinking of dropping product line C because it is reporting an operating loss. Market studies have shown that if Morning Start drops product C, they can keep the same sales price for products A and B. Engineering studies have shown that if Morning Start drops product C, the variable expense as a percentage of sales would not change. If Morning Start drops product line C, total fixed expenses for the company will remain the same. " By what percentage would Morning Start have to increase production and sales of product line B to drop product line C and still earn the same Operating Income for the company? About 42% because by droping the line C the company will need to make up the 16,000 fixed expenses that line C has. (38,000+16,000)=54,000-18,000=36,000-15,000=21,000+12,000-16,000=17,000 in operating income. In each cell below, replace the number with the word relevant or irrelevant for your computation A B C Sales Relevant Relevant Relevant Variable costs Relevant Relevant Relevant Contribution margin Relevant Relevant Relevant Fixed expenses Irrelevant Irrelevant Irrelevant Operating income (loss) Irrelevant Irrelevant Irrelevant Can You please go over the problems above and let me know what is wrong and whatI and do to fix it/solve it