Question
PA6-6 (Algo) Multiproduct CVP, Analyzing Break-Even Point, Target Profit, Degree of Operating Leverage [LO 6-5, 6-6] Pin Cushion Company produces two models of sewing
PA6-6 (Algo) Multiproduct CVP, Analyzing Break-Even Point, Target Profit, Degree of Operating Leverage [LO 6-5, 6-6] Pin Cushion Company produces two models of sewing basket. Information about Pin Cushion's products is given below. Sales revenue Less: Variable costs. Contribution margin Total units sold Product A Product B $31,000 $46,000 12,600 21,000 $18,400 $25,000 840 1,880 Pin Cushion's fixed costs total $36,100. Required: 1. Determine Pin Cushion's weighted-average unit contribution margin and weighted-average contribution margin ratio. 2. Calculate Pin Cushion's break-even units and break-even sales revenue. 3. Calculate the number of units of each product that must be sold to break even. 4. Calculate the total sales necessary for Pin Cushion to earn a profit of $63,800. 5. Calculate the sales revenue generated from each product line if Pin Cushion earns its target profit of $63,800. 6. Using the original information, calculate Pin Cushion's degree of operating leverage.
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