Question Content Area

Multiple$-$Product Break$-$even, Break$-$Even Sales Revenue

Cherry Blossom Products Inc. produces and sells yoga$-$training products: how$-$to DVDs and a basic

equipment set $($blocks$,$ strap, and small pillows$).$ Last year, Cherry Blossom Products sold $13,500$

#DVDs and $4,500$ equipment sets. Information on the two products is as follows:

Total fixed cost is $$99,900.$

Suppose that in the coming year, the company plans to produce an extra$-$thick yoga mat for sale to

health clubs. The company estimates that $9,000$ mats can be sold at a price of $$16$ and a varlable cost

per unit of $$9.$ Total fixed cost must be increased by $$33,300($making total flxed cost $$133,200).$

Assume that anticipated sales of the other products, as well as their prices and variable costs, remain

the same.

What is the sales mix of DVDs$,$ equipment sets, and yoga mats?

Compute the break$-$even quantity of each product.

Break$-$even DVDs

Break$-$even equipment sets

Break$-$even yoga mats

Units

Units

$3$a$.$ Prepare an income statement for Cherry Blossom Products for the coming year.

Cherry Blossom Products Inc.

Income Statement

For the Coming Year

$3$b$.$ What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break$-$even sales revenue. $($Note: Round the contribution margin ratio to the nearest whole percent; round the break$-$even sales revenue to the nearest dollar.$)$

Overall contribution margin ratio fill in the blank

$\%$

Overall break$-$even sales revenue $fill in the blank

$4.$ Compute the margin of safety for the coming year in sales dollars.

$fill in the blank