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Most businesses sell several products at varying prices. The products often have different unit variable costs. Thus, the total profit andthe breakeven point depend on
Most businesses sell several products at varying prices. The products often have different unit variable costs. Thus, the total profit andthe breakeven point depend on the proportions in which the products are sold. Sales mix is the relative contribution of sales amongvarious products sold by a firm. Assume that the sales of Jordan Incorporated for a typical year are as follows: Product Units Sold Sales MixA 18,384 Ba%B 4,596 28Total 22,988 laex Assume the following unit selling prices and unit variable costs: ContributionProduct Selling Price Variable Cost MarginA % 92 £ 77 £ 15B 152 112 43 Fixed costs are $424 000 per year. Assume that the sales mix, expressed in terms of relative physical units sold, is constant as salesvolume changes. Required: 1. Determine the breakeven point in total units and, for this breakeven point, calculate the number of units of A and B that must besold. Use the weighted-average contribution margin approach. 3. Determine the overall breakeven point in terms of sales dollars based on the weighted-average contribution margin ratio (CMR).(Hint: The weights for calculating the weighted-average CMR are based on relative sales dollars, not units, of the two products.) Breakdown the total sales dollars breakeven point into sales dollars for product A and sales dollars for product B. 5. Assume the original facts except that now fixed costs are expected to be $42 400 higher than originally planned. How does thisexpected increase in fixed costs affect the breakeven point in units? How does the percentage change in the breakeven pointcompare to the percentage increase in fixed costs? Complete this question by entering your answers in the tabs below. Required 1 Required 3 Required 5 Determine the breakeven point in total units and, for this breakeven point, calculate the number of units of A and B that mustbe sold. Use the weighted-average contribution margin approach. (Round your answer up to the nearest whole number.) QOverall break-even point in units Breakeven sales in units for Product & Breakeven sales in units for Product B _m Complete this question by entering your answers in the tabs below. Required 1 Required 3 Required 5 Determine the overall breakeven point in terms of sales dollars based on the weighted-average contribution margin ratio(CMR). (Hint: The weights for calculating the weighted-average CMR are based on relative sales dollars, not units, of the twoproducts.) Break down the total sales dollars breakeven point into sales dollars for product A and sales dollars for product B.(Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) Show less & Qverall Breakeven point in dollars _ Breakeven point in dollars for Product A _Breakeven point in dollars for Product B _ { Required 1 Required 5 > Complete this question by entering your answers in the tabs below. Required 1 Required 3 Required 5 Assume the original facts except that now fixed costs are expected to be 542,400 higher than originally planned. How doesthis expected increase in fixed costs affect the breakeven point in units? How does the percentage change in the breakevenpoint compare to the percentage increase in fixed costs? Percentage change in fixed costs _E Percentage changs in breakeven point _E£ Required 3
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