Accounting: What the Numbers Mean
11th Edition
ISBN: 9781259535314
Author: David Marshall, Wayne William McManus, Daniel Viele
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 12, Problem 12.26P
Problem 12.26
LO 8. 9, 10, 11
CYP application-eliminate product from operations? Muscle Beach, Inc., makes three models of high-performance weight-training benches. Current operating data are summarized here:
| MegaMuscle | PowerGym | ProForce | |
| Selling price per unit | $ 170 | $ 220 | $ 310 |
| Contribution margin per unit | 51 | 77 | 62 |
| Monthly sales volume-units | 4,000 | 3,000 | 1,000 |
| Fixed expenses per month | Total of $468,000 | ||
Required:
- Calculate the contribution margin ratio of each product.
- Calculate the firm’s overall contribution margin ratio.
- Calculate the firm’s monthly break-even point in sales dollars.
- Calculate the firm’s monthly operating income.
- Management is considering the elimination of the ProForce model due to its low sales volume and low contribution margin ratio. As a result, total fixed expenses can be reduced to $420,000 per month. Assuming that this change would not affect the other models, would you recommend the elimination of the ProForce model? Explain your answer.
- Assume the same facts as in part e. Assume also that the sales volume for the PowerGym model will increase by 500 units per month if the ProForce model is eliminated. Would you recommend eliminating the ProForce model? Explain your answer.
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Chapter 12 Solutions
Accounting: What the Numbers Mean
Ch. 12 - Prob. 12.1MECh. 12 - Prob. 12.2MECh. 12 - Prob. 12.3MECh. 12 - Prob. 12.4MECh. 12 - Prob. 12.5MECh. 12 - Prob. 12.6MECh. 12 - Exercise 12.7 LO 3 Cost classifications For each...Ch. 12 - Exercise 12.8 LO 3 Cost classifications For each...Ch. 12 - Prob. 12.9ECh. 12 - Prob. 12.10E
Ch. 12 - Prob. 12.11ECh. 12 - Prob. 12.12ECh. 12 - Prob. 12.13ECh. 12 - Prob. 12.14ECh. 12 - Exercise 12.15
LO 8, 9
Special promotion—effects...Ch. 12 - Prob. 12.16ECh. 12 - Problem 12.17 LO 6 High-low method A department of...Ch. 12 - Problem 12.18
LO 6
High-low method—missing amounts...Ch. 12 - Prob. 12.19PCh. 12 - Prob. 12.20PCh. 12 - Prob. 12.21PCh. 12 - Prob. 12.22PCh. 12 - Prob. 12.23PCh. 12 - Prob. 12.24PCh. 12 - Prob. 12.25PCh. 12 - Problem 12.26 LO 8. 9, 10, 11 CYP...Ch. 12 - Prob. 12.27PCh. 12 - Prob. 12.28PCh. 12 - Prob. 12.29CCh. 12 - Prob. 12.30CCh. 12 - Prob. 12.31CCh. 12 - Case 12.32 LO 12 Understanding the effects of...Ch. 12 - Prob. 12.33C
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