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PA7. LO 3.4 Manatoah Manufacturing produces 3 models of window air conditioners: model 101, model 201, and model 301. The sales price and variable costs
PA7. LO 3.4 Manatoah Manufacturing produces 3 models of window air conditioners: model 101, model 201, and model 301. The sales price and variable costs for these three models are as follows: Sales Price per Unit Variable Cost per Unit Product Model 101 Model 201 Model 301 $275 350 400 $185 215 245 The current product mix is 4:3:2. The three models share total fixed costs of $430,000. Solution A. Calculate the sales price per composite unit: B. What is the contribution margin per composite unit? C. Calculate Manatoah's break-even point in both dollars and units D. Using an income statement format, prove that this is the break-even point. Contribution Margin per Unit Product Model 101 (Ratio 4) Model 201 (Ratio 3) Model 301 (Ratio 2) Sales Price per Unit 275 350 400 Variable Cost per Unit 185 215 245 Composite unit Composite Sales Price Composite Variable Cost Composite Cont. Margin Break even in composite units = Number of units per product Model 101 break even units x 4 units per composite Model 201 break even units x 3 units per composite Model 301 break even units x 2 unite per composite Sales Model 101 x $275 Model 201 x $350 Model 301 X $400 Page 5 of 6 OpenStax Principles of Accounting, Volume 2: Managerial Accounting Chapter 3: Cost-Volume-Profit Analysis Total Sales Variable costs Model 101 x $185 Model 201 x $215 Model 301 x $245 Total Variable Costs Contribution margin Fixed costs Net income
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