Calculate the weighted average unit contribution margin, assuming a constant sales mix.
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Oriental Furnitures makes three types of quality wooden furniture. Information for these three products are shown below:
|
A1 |
A2 |
A3 |
Total |
|
|
Selling price per unit |
$200 |
$500 |
$1 000 |
|
|
Variable cost per unit |
$60 |
$250 |
$600 |
|
|
Expected unit sales (annual) |
15,000 |
7,000 |
2,000 |
24,000 |
|
Sales mix |
60 percent |
30 percent |
10 percent |
100 percent |
Total annual fixed costs are $4,000,000. Assume the sales mix remains the same at all levels of sales.
Required: SHOW YOUR WORKINGS FOR ALL SECTIONS
Calculate the weighted average unit contribution margin, assuming a constant sales mix.
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- Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and trim kits. Fixed cost equals 146,000. Each door handle sells for 12 and has variable cost of 9; each trim kit sells for 8 and has variable cost of 5. Required: 1. What are the contribution margin per unit and the contribution margin ratio for door handles and for trim kits? 2. If Polaris sells 20,000 door handles and 40,000 trim kits, what is the operating income? 3. How many door handles and how many trim kits must be sold for Polaris to break even? 4. CONCEPTUAL CONNECTION Assume that Polaris has the opportunity to rearrange its plant to produce only trim kits. If this is done, fixed costs will decrease by 35,000, and 70,000 trim kits can be produced and sold. Is this a good idea? Explain.Starling Co. manufactures one product with a selling price of 18 and variable cost of 12. Starlings total annual fixed costs are 38,400. If operating income last year was 28,800, what was the number of units Starling sold? a. 4,800 b. 6,400 c. 5,600 d. 11,200Manatoah Manufacturing produces 3 models of window air conditioners: model 101, model 201, and model 301. The sales price and variable costs for these three models are as follows: The current product mix is 4:3:2. The three models share total fixed costs of $430,000. Calculate the sales price per composite unit. What is the contribution margin per composite unit? Calculate Manatoahs break-even point in both dollars and units. Using an income statement format, prove that this is the break-even point.
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