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Multiple-Product Profitability Analysis Spalding produces acrylic and polycarbonate basketball backboard and rim sets. Assume the following represents sales information for last year. Units manufactured
Multiple-Product Profitability Analysis Spalding produces acrylic and polycarbonate basketball backboard and rim sets. Assume the following represents sales information for last year. Units manufactured and sold Sales revenue Acrylic Polycarbonate Total 1,200 $360,000 2,100 Variable costs Contribution margin 208,050 $151,950 Fixed costs 3,300 $441,000 $801,000 272,550 480,600 $168,450 $320,400 (255,378) Before-tax profit 65,022 Income taxes (20%) 13,004 $52,018 After-tax profit Required a. Determine the current break-even point in sales dollars. b. With the current product mix and break-even point, determine the average unit contribution margin and unit sales. Note: Round average unit contribution margin to two decimal places (for example, round 7.555 to 7.56). Note: Round your answer for unit sales up to the nearest whole unit (for example, round 41.2 to 42). Average unit contribution margin: $ Unit sales: c. Sales representatives believe that the total sales will increase to 3,450 units, with the sales mix likely shifting to 80% polycarbonate and 20% acrylic over the next few years. Evaluate the desirability of this projection. Profitability will with the projection shift. Jan Bar
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