PART 4: MANAGEMENT ACCOUNTING

4.1 Computing the Break-Even Point for a Multi-Product Company

Wiseman Inc. (a privately held company) markets two fitness products:

1. Hero Plank Machine
2. Makeover

A contribution margin income statement for a recent month for the two games appears as follows:

		Hero Plank		Makeover		Total
Sales		$	55,000		$	95,000		$	150,000
Less: Variable expenses			40,000			65,000			105,000
Contribution margin		$	?		$	?			$?
Less: Fixed expenses									36,000
Net income								$	?

REQUIRED:

1. Calculate the Contribution margin & Net Income for

Hero Plank ____________

Makeover ____________

Total Contribution margin ____________

Net Income ____________

1. Compute the overall Contribution Margin Ratio for Wiseman Inc.

Write down the Formula for the CM Ratio and show calculated CM Ratio.

1. Compute the overall break-even point for the company in sales dollars for Wiseman Inc.

Write down the Formula for Break-Even and show the calculated break-even point in $