Question
Please answer the following: When submitting the completed project, it should include: Please show all work and number each answer accordingly. Round all answers to
Please answer the following:
When submitting the completed project, it should include:
- Please show all work and number each answer accordingly.
- Round all answers to two decimal places.
Part II Effect of Sales Mix on CVP Analysis (worth a total of 24 points)
Fat Cat Furniture store sells two types of products; cat beds and scratching posts. Over the past year Fat at sold 6,000 cat beds and 4,000 scratching posts, the sales mix of 6,000 beds to 4,000 posts creates a percentage of 60% for the cat beds and 40% for the scratching posts. Fat Cats total fixed costs are $40,000. The cat beds unit selling price is $44.00 and variable costs per bed are $24.00. The scratching posts unit selling price is $100.00 and variable cost per post is $30.00.
Required:
- Calculate the weighted average contribution margin per unit.
- Calculate Fat Cats breakeven point in units for the package of products.
- Calculate how many units of each product line the company must sell in order to breakeven.
- Calculate the sales dollars required of each product line to breakeven Do not use the weighted average contribution margin ratio formula due to rounding issues. May still use the weighted average contribution margin per unit formula.
- Prove the breakeven point by preparing a contribution margin income statement Make sure to provide three columns: one for Cat Beds, one for Scratching Posts, and one for Total.
- The owner of Fat Cat Furniture wants to earn a $60,000 profit. Calculate the sales volume in units and total sales dollars of each product line the company must sell in order to earn $60,000 in profit. Do not use the weighted average contribution margin ratio formula due to rounding issues. May still use the weighted average contribution margin per unit formula.
Part III CVP Analysis (worth a total of 5 points)
How will changes in sales price, variable or fixed costs, affect the breakeven point? Answer the question using the chart below.
| Cause | Effect | Result |
| Contribution Margin per unit | Breakeven Point | |
| 1. Selling Price per Unit Increase |
|
|
| 2. Selling Price per Unit Decrease |
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|
| 3. Variable Cost per Unit Increase |
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| 4. Variable Cost per Unit Decrease |
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| 5. Total Fixed Cost Increase |
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| 6. Total Fixed Cost Decrease |
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|
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Intermediate Accounting
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
16th edition
1118742974, 978-1118743201, 1118743202, 978-1118742976
