Question
The president of AMG Enterprises is considering expanding sales by producing three different versions of their product. After reviewing the sales forecasts, the sales department
The president of AMG Enterprises is considering expanding sales by producing three different versions of their product. After reviewing the sales forecasts, the sales department feels that for every item of A sold, 6 of M can be sold and 5 of G can be sold.
The following information has been assembled by the sales department and the production department.
| A | M | G |
Sales price (per unit) | $15 | $10 | $5 |
VC per unit | $9 | $7 | $4.5 |
The fixed costs associated with the manufacture of these three products are $75,000 per year.
Required:
(a) What is the weighted average contribution margin per unit? ____________(4 decimal places)
(b) What is the break-even total unit? ____________
(c) What is number of units of each product that would be sold at the break-even point?
A: __________,
M: __________, and
G: ___________
(d) What is the break-even total revenue (sales dollars)? _____________
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