Part 1:

JTL MANUFACTURING has a sales mix of sprinklers, valves, and controllers as follows. Annual expected sales: Sale of sprinklers 460,000 units at $26.50 Sale of valves 1,480,000 units at $11.20 Sale of controllers 60,000 units at $42.50 Variable manufacturing cost per unit: Sprinklers $13.96 Valves $ 7.95 Controllers $29.75 Fixed manufacturing overhead cost (total) $760,000 Variable selling and administrative expenses per unit: Sprinklers $1.30 Valves $0.50 Controllers $3.41 Fixed selling and administrative expenses (total) $1,600,000

Instructions:

(a) Determine the sales mix based on unit sales for each product.

(b) Using the annual expected sales for these products, determine the weighted-average unit contribution margin for these three products. (Round to two decimal places.)

(c) Assuming the sales mix remains the same, what is the break-even point in units for these products?

Part 2

The section of JTL MANUFACTURING that produces controllers for the company provided the following information. Sales for month of February: 4,000 Variable manufacturing cost per unit: $9.75 Sales price per unit: $42.50 Fixed manufacturing overhead cost (per month for controllers): $81,000 Variable selling and administrative expenses per unit: $3.00 Fixed selling and administrative expenses (per month for controllers): $13,122

Instructions:

(a) Using this information for the controllers, determine the contribution margin ratio, the degree of operating leverage, the break-even point in dollars, and the margin of safety ratio for JTL MANUFACTURING Corporation on this product.