Question
Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker.
Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker. In the coming year, Texas-Q expects to sell 13,500 portable grills, 49,500 stationary grills, and 4,500 smokers. Information on the three models is as follows:
Portable | Stationary | Smokers | |
Price | $87 | $196 | $253 |
Variable cost | |||
per unit | 48 | 127 | 138 |
Total fixed cost is $2,130,650.
Required: | |
1. | What is the sales mix of portable grills to stationary grills to smokers? |
2. | Compute the break-even quantity of each product. |
3. | Prepare an income statement for Texas-Q for the coming year. What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break-even sales revenue. Enter the contribution margin ratio as a percentage rounded to two decimal places; round the break-even sales revenue to the nearest dollar. |
4. | Compute the margin of safety for the coming year. |
2. Compute the break-even quantity of each product.
Break-Even Portable Grills | |
Break-Even Stationary Grills | |
Break-Even Smokers |
Points:
0 / 3
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1. See text section "Determining the Sales Mix."
3(a) What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break-even sales revenue. Enter the contribution margin ratio as a percentage rounded to two decimal places; round the break-even sales revenue to the nearest dollar.
Contribution Margin Ratio | % |
Break-Even Revenue |
Points:
0 / 2
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Divide total contribution margin by sales. Divide fixed costs by contribution margin ratio.
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