Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

Muscle Beach Inc. makes three models of high-performance weight-training benches. Current operating data are summarized here: 206 Selling price per unit Contribution margin per unit

image text in transcribed

Muscle Beach Inc. makes three models of high-performance weight-training benches. Current operating data are summarized here: 206 Selling price per unit Contribution margin per unit Monthly sales volume-units Fixed expenses per month MegaMuscle PowerGym ProForce $ 135 $ 296 44 75 56 3,100 2,030 1,030 Total of $318,800 a. Calculate the contribution margin ratio of each product. b. Calculate the firm's overall contribution margin ratio. c. Calculate the firm's monthly breakeven point in sales dollars. d. Calculate the firm's monthly operating income. e. Management is considering the elimination of the ProForce model due to its low sales volume and low contribution margin ratio. As a result, total fixed expenses can be reduced to $268,910 per month. Assuming that this change would not affect the other models, what would be the effect on net operating income. Would you recommend the elimination of the ProForce model? f. Assume the same facts as in requirement e-1. Assume also that the sales volume for the PowerGym model will increase by 501 units per month if the ProForce model is eliminated. What would be the effect on operating income. Would you recommend eliminating the ProForce model

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Stacey Whitecotton, Robert Libby, Fred Phillips

2nd edition

978-0078025518

Students also viewed these Accounting questions