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Part B Bearcat Paws produces two sizes of Christmas Ornaments. The selling prices and variable costs are as follows: Small Large Selling price per ornament
Part B
Bearcat Paws produces two sizes of Christmas Ornaments. The selling prices and variable costs are as follows:
| Small | Large |
Selling price per ornament | $8.00 | $20.00 |
Variable cost per ornament | 4.00 | 8.00 |
The company sells three small Christmas ornaments for every large Christmas ornament.
The contribution margin income statement for the year ended December 31, 2015 follows:
Sales revenue | $225,000 |
Variable costs | 90,000 |
Contribution margin | 135,000 |
Fixed costs | 75,000 |
Profit | $60,000 |
Required
- Calculate the weighted average contribution margin per unit for Bearcat Paws.
- Determine the break-even point in units.
- Determine the number small and the number of large ornaments that would need to be produced at the break-even point.
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