Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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:

  1. Please show all work and number each answer accordingly.
  2. 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:

  1. Calculate the weighted average contribution margin per unit.

  1. Calculate Fat Cats breakeven point in units for the package of products.

  1. Calculate how many units of each product line the company must sell in order to breakeven.

  1. 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.

  1. 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.

  1. 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

3. Variable Cost per Unit Increase

4. Variable Cost per Unit Decrease

5. Total Fixed Cost Increase

6. Total Fixed Cost Decrease

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Pioneers Of Critical Accounting A Celebration Of The Life Of Tony Lowe

Authors: Jim Haslam, Prem Sikka

1st Edition

113754211X, 9781137542113

More Books

Students also viewed these Accounting questions

Question

What is meant by LIBOR and LIBID. Which is higher? AppendixLO1

Answered: 1 week ago