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: 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.]

Product	Sales Price per Unit	Variable Cost per Unit	Contribution Margin per Unit	Ratio
AA	$50	$30		5
BB	$40	$15		3
CC	$30	$10		2
Composite Unit
	Composite Sales Price	Composite Variable Cost	Composite Cont.Margin
Break even in composite units =
Number of units per product
AA _____ units 5 per composite
BB _____ units 3 per composite
CC _____ units 2 per composite
Sales
Product AA _____ $50
Product BB _____ $40
Product CC _____ $30
Total Sales
Variable costs
Product AA _____ $30
Product BB _____ $15
Product CC _____ $10
Total Variable Costs
Contribution Margin
Fixed costs
Net income