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: DVDs Equipment Sets Price $8 $25 Variable cost per unit 4 15 Total fixed cost is $84,920. 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 $15 and a variable cost per unit of $9. Total fixed cost must be increased by $28,980 (making total fixed cost $113,900). Assume that anticipated sales of the other products, as well as their prices and variable costs, remain the same. Unless otherwise instructed, round all total dollar figures (e.g., sales, total contribution margin) to the nearest dollar, breakeven or target units to the nearest unit, and unit costs and unit contribution margins to the nearest cent. Round ratios to four significant digits. Part 1: Sales Mix Instructions and Part 2: Break-Even 1. What is the sales mix of DVDs, equipment sets, and yoga mats? 2. Compute the break-even quantity of each product. Break-even DVDs fill in the blank c26c03fedfb302e_2 units Break-even equipment sets fill in the blank c26c03fedfb302e_3 units Break-even yoga mats fill in the blank c26c03fedfb302e_4 units Feedback 1. See text section "Determining the Sales Mix." Part 3a: Income Statement 3a. Prepare an income statement for Cherry Blossom Products for the coming year. Cherry Blossom Products Inc. Income Statement For the Coming Year $Sales Total variable cost $Contribution margin Total fixed cost $Operating income Feedback 3a. Prepare contribution margin income statement. Part 3b: Contribution Margin Ratio and Part 4: Margin of Safety 3b. 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 two decimal places; round the break-even sales revenue to the nearest dollar.) Overall contribution margin ratio fill in the blank 2b1de9fc4f9b00e_1 % Overall break-even sales revenue $fill in the blank 2b1de9fc4f9b00e_2
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:
| DVDs | Equipment Sets | |
| Price | $8 | $25 |
| Variable cost per unit | 4 | 15 |
Total fixed cost is $84,920.
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 $15 and a variable cost per unit of $9. Total fixed cost must be increased by $28,980 (making total fixed cost $113,900). Assume that anticipated sales of the other products, as well as their prices and variable costs, remain the same.
Unless otherwise instructed, round all total dollar figures (e.g., sales, total contribution margin) to the nearest dollar, breakeven or target units to the nearest unit, and unit costs and unit contribution margins to the nearest cent. Round ratios to four significant digits.
1. What is the sales mix of DVDs, equipment sets, and yoga mats?
2. Compute the break-even quantity of each product.
| Break-even DVDs | fill in the blank c26c03fedfb302e_2 units |
| Break-even equipment sets | fill in the blank c26c03fedfb302e_3 units |
| Break-even yoga mats | fill in the blank c26c03fedfb302e_4 units |
1. See text section "Determining the Sales Mix."
3a. Prepare an income statement for Cherry Blossom Products for the coming year.
Income Statement
For the Coming Year
|
|
$Sales |
|
|
Total variable cost |
|
|
$Contribution margin |
|
|
Total fixed cost |
|
|
$Operating income |
3a. Prepare contribution margin income statement.
3b. 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 two decimal places; round the break-even sales revenue to the nearest dollar.)
| Overall contribution margin ratio | fill in the blank 2b1de9fc4f9b00e_1 | % |
| Overall break-even sales revenue | $fill in the blank 2b1de9fc4f9b00e_2 |
4. Compute the margin of safety for the coming year in sales dollars.
$fill in the blank 2b1de9fc4f9b00e_3
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