Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and unit variable cost for the three products are as follows: Sales Price Variable Cost per Unit $25 Product per Unit AA $50 45 20 35 15 Their sales mix is reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $288,000 per year. A. What are total variable costs for Morris with their current product mix? Total variable costs $ B. Calculate the number of units of each product that will need to be sold in order for Morris to break even. Number of Units per Product BB CC AA BB CC C. What is their break-even point in sales dollars? Break-even point in sales $
Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and unit variable cost for the three products are as follows: Sales Price Variable Cost per Unit $25 Product per Unit AA $50 45 20 35 15 Their sales mix is reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $288,000 per year. A. What are total variable costs for Morris with their current product mix? Total variable costs $ B. Calculate the number of units of each product that will need to be sold in order for Morris to break even. Number of Units per Product BB CC AA BB CC C. What is their break-even point in sales dollars? Break-even point in sales $
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 6PA: Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and unit...
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Step 1 Introduction
Break Even Point (BEP) :— It is the point of production where total cost is equal to total revenue. At this point, total contribution margin is equal to total fixed cost.
BEP = Fixed Cost/Contribution Margin per unit
Contribution Margin :— It is the difference between sales and variable cost.
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