PA6. LO 3.4 Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and unit variable cost for the three products are as follows: Variable Cost Product per Unit AA BB CC Sales Price per Unit $50 40 30 $30 15 10 Their sales mix is reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $258,000 per year. Solution A. What are total variable costs required for Morris to break even? [Complete table below.) B. Calculate the number of units of each product that will need to be sold in order for Morris to break even. AA BB CC C. What is their break-even point in sales dollars? [In table below.] D. Using an income statement format, prove that this is the break-even point. [In table.] Contribution Sales Price Variable Cost Margin per Product Unit Ratio AA $50 $30 BB $40 $15 CC $30 $10 per Unit per Unit 5 3 2 Composite Unit Composite Sales Price Composite Variable Cost Composite Cont.Margin Break even in composite units = Number of units per product AA units x 5 per composite BB units x 3 per composite CC units x 2 per composite Sales Product AA Product BB Product CC Total Sales x $50 x $40 x $30 Page 4 of 6 OpenStax Principles of Accounting, Volume 2: Managerial Accounting Chapter 3: Cost-Volume-Profit Analysis Variable costs Product AA x $30 Product BB x $15 Product CC x $10 Total Variable Costs Contribution Margin Fixed costs Net income