Question
Need help finishing this out. I was able to complete first part, but stuck on 2nd. I bolded the questions. Muscle Beach Inc. makes three
Need help finishing this out. I was able to complete first part, but stuck on 2nd. I bolded the questions.
Muscle Beach Inc. makes three models of high-performance weight-training benches. Current operating data are summarized here:
MegaMuscle PowerGym ProForce Selling price per unit $ 140 $ 200 $ 290 Contribution margin per unit 42 77 58 Monthly sales volumeunits 3,000 2,000 1,000 Fixed expenses per month Total of $320,000
- Calculate the contribution margin ratio of each product.
- Calculate the firm's overall contribution margin ratio.
- Calculate the firm's monthly breakeven point in sales dollars.
- Calculate the firm's monthly operating income.
- 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 $270,000 per month. Assuming that this change would not affect the other models, would you recommend the elimination of the ProForce model?
- Assume the same facts as in part e. Assume also that the sales volume for the PowerGym model will increase by 500 units per month if the ProForce model is eliminated. Would you recommend eliminating the ProForce model?
Calculate the firm's overall contribution margin ratio. (Round your answer to 1 decimal place.)
Calculate the firm's monthly breakeven point in sales dollars. (Round your intermediate calculations to 1 decimal place. Round your final answer to the nearest whole number)
Calculate the firm's monthly operating income.
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 $270,000 per month. Assuming that this change would not affect the other models, what would be the effect on net operating income.
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