Question 5 (11 marks)

Shoosta Ltd produces two different products with the following monthly data:

	A1	A2	Total
Selling price per unit	$100	$12
Variable cost per unit	$ 70	$ 3
Expected unit sales	21,000	14,000	35,000
Sales mix	60 percent	40 percent	100 percent
Fixed costs			$500,000

Assume the sales mix remains the same at all levels of sales.

Round to the nearest unit of product, hundredth of a per cent, and nearest cent where appropriate.

Required (show your workings for each question):

1. Calculate the weighted average contribution margin per unit. (1 mark)
2. How many units in total must be sold to break even? (1 mark)
3. How many units of each product must be sold to break even? (1 mark)
4. How many units of each product must be sold to earn a monthly profit of $100,000? (3 marks)
5. Prepare a contribution margin income statement for the month. (3 marks)
6. Would the CVP Analysis technique be appropriate for multi-product businesses operating during this global pandemic? Explain. (2 marks)