Sales Mix (Product Mix)

Q1: in sales mix analysis what is the impact on net operating income if the company tend to focus on low contribution margin products (give example).

Q1: Stuffed Animals, Inc. has decided to focus strictly on producing and selling one type of teddy bear. For the upcoming year, Stuffed Animals, Inc. hopes to make a 25% profit on sales. Fixed costs are set at $51,000, and variable costs are $9.50 per unit. If teddy bears are sold at $15 each, how many bears must be sold to meet the profit goal?

Q2: The following monthly budgeted data are available for a wholesale company:

	Product A	Product B	Product C
Sales	$800,000	$400,000	$200,000
Variable expenses	640,000	240,000	140,000
Contribution margin	$160,000	$160,000	$ 60,000

The budgeted total fixed expense is $ 150,000. Required:

a) Calculate the break-even sales for the month?

b) Calculate the margin of safety in sales dollars?

c) What is the sales Mix?

Q3: CVP analysis assumes that costs can be accurate-

ly divided into fixed and variable categories. Do

you agree? Explain.

Use the following information to answer questions 3-

18 to 3-20.

You are given the following details regarding the

operations of Cheng Hi Fried Rice

Restaurant.

Fixed costs

60.000

Selling price of 6.00

a plate of fried

rice

Variable costs

4.00

per plate of

fried rice

3-18 What is the contribution margin percentage per

plate of fried rice?

a. 2

b. 50%

c. 33.33%

d. 66.67%

3-19 Sales volume next year is anticipated to be

50,000 plates of fried rice. By what percentage would

the selling price have to be changed to generate a net

income of 75,000, assume corporate tax is 25%, all

other things remaining the same?

a. +20%

b. -46.67%

c. 0%

d. +12%

3-20 Calculate the breakeven point in both units and

sales value

a. 30,000 plates of fried rice and 60,000

b. 180,000 plates of fried rice and 80,000

c. 10,000 plates of fried rice and 180,000

d. 30,000 plates of fried rice and 180,000

3-42 CVP, sensitivity analysis. Mondial Nails pro-

duces a famous nail polish with a unique glossy feature and sells it for $25 per unit. The operating income

for 2017 is as follows:

Sales revenue

Raw materials

Variable manufacturing -

costs

Other variable

costs

Contribution

margin

Fixed cost

Operating in-

come

Per

unit

25

5

4

Total

750,000

150.000

120.000

6

180,000

10

300,000

174.000

126.000

Mundial Nails would like to increase its profitability

over the next year by at least 20%. To do so, the com-

pany is considering the following options: