Multiple-Product Break-even, Break-Even Sales Revenue Cherry Blossom Products Inc. produces and sells yoga-training products: how-to DVDs and a basic equipment set (blocks, strap, and small pillows). Last year, Cherry Blossom Products sold 13,500 DVDs and 4,500 equipment sets. Information on the two products is as follows: DVDs Equipment Sets Price $8 $25 Variable cost per unit 4 15 Total fixed cost is $94,500. Suppose that in the coming year, the company plans to produce an extra-thick yoga mat for sale to health clubs. The company estimates that 9,000 mats can be sold at a price of $19 and a variable cost per unit of $10. Total fixed cost must be increased by $31,500 (making total fixed cost $126,000). Assume that anticipated sales of the other products, as well as their prices and variable costs, remain the same.

Multiple-Product Break-even, Break-Even Sales Revenue Cherry Blossom Products Inc. produces and sells yoga-training products: how-to DVDs and a basic equipment set (blocks, strap, and small pillows). Last year, Cherry Blossom Products sold 13,500 DVDs and 4,500 equipment sets. Information on the two products is as follows: DVDs Equipment Sets Price $8 $25 Variable cost per unit 4 15 Total fixed cost is $94,500. Suppose that in the coming year, the company plans to produce an extra-thick yoga mat for sale to health clubs. The company estimates that 9,000 mats can be sold at a price of $19 and a variable cost per unit of $10. Total fixed cost must be increased by $31,500 (making total fixed cost $126,000). Assume that anticipated sales of the other products, as well as heir prices and variable costs, remain the same. Part 1: Sales Mix Instructions and Part 2: Break-Even 1. What is the sales mix of DVDs, equipment sets, and yoga mats? 3:1:2 2. Compute the break-even quantity of each product. Break-even DVDs X units Break-even equipment sets X units Break-even yoga mats X units Feedback Check My Work 1. See text section "Determining the Sales Mix." Part 3a: Income Statement Part 3a: Income Statement 3a. Prepare an income statement for Cherry Blossom Products for the coming year. Cherry Blossom Products Inc. Income Statement For the Coming Year Sales $ Total variable cost Contribution margin Total fixed cost Operating income Feedback Check My Work 3a. Prepare contribution margin income statement. Part 3b: Contribution Margin Ratio and Part 4: Margin of Safety 3b. What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break-even sales revenue. (Note: Round the contribution margin ratio to the nearest whole percent; round the break-even sales revenue to the nearest dollar.) Overall contribution margin ratio % Overall break-even sales revenue $ 4. Compute the margin of safety for the coming year in sales dollars. $ Feedback Check My Work 3b. Divide total contribution margin by sales. Divide total fixed costs by contribution margin ratio. 4. Compute the difference between expected sales and break-even sales