(a)
Concept introduction:
Breakeven Point:
The level of sales where the company is neither on profit nor loss is termed as breakeven point. In other words, that level of sales at which the fixed cost of the business is recovered.
The breakeven point if the product mix is
Answer to Problem 17E
The breakeven point in units is
Explanation of Solution
Contribution Margin Income Statement
Particulars | Standard | Deluxe |
Rental Price |
||
Variable Cost per Canoe |
||
Contribution Margin |
As the product mix is
So, the weighted contribution margin is calculated as:
The break-even point in units is calculated as:
(b)
Concept introduction:
Breakeven Point:
The level of sales where the company is neither on profit nor loss is termed as breakeven point. In other words, that level of sales at which the fixed cost of the business is recovered.
The breakeven point if the sales of both model increases by
Answer to Problem 17E
The breakeven point in units is
Explanation of Solution
Contribution Margin Income Statement
Particulars | Standard | Deluxe |
Rental Price |
||
Variable Cost per Canoe |
||
Contribution Margin |
As the product mix is
So, the weighted contribution margin is calculated as:
The break-even point in units is calculated as:
(c)
Concept introduction:
Breakeven Point:
The level of sales where the company is neither on profit nor loss is termed as breakeven point. In other words, that level of sales at which the fixed cost of the business is recovered.
The breakeven point if the fixed cost is increased by
Answer to Problem 17E
The breakeven point in units is
Explanation of Solution
Contribution Margin Income Statement
Particulars | Standard | Deluxe |
Rental Price |
||
Variable Cost per Canoe |
||
Contribution Margin |
As the product mix is
So, the weighted contribution margin is calculated as:
The break-even point in units is calculated as:
(d)
Concept introduction:
Breakeven Point:
The level of sales where the company is neither on profit nor loss is termed as breakeven point. In other words, that level of sales at which the fixed cost of the business is recovered.
The breakeven point if the variable cost increases by
Answer to Problem 17E
The breakeven point in units is
Explanation of Solution
Contribution Margin Income Statement
Particulars | Standard | Deluxe |
Rental Price |
||
Variable Cost per Canoe |
||
Contribution Margin |
As the product mix is
So, the weighted contribution margin is calculated as:
The break-even point in units is calculated as:
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Chapter 6 Solutions
Managerial Accounting - With Access
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- Marchete Company produces a single product. They have recently received the results of a market survey that indicates that they can increase the retail price of their product by 8% without losing customers or market share. All other costs will remain unchanged. Their most recent CVP analysis is shown. If they enact the 8% price increase, what will be their new break-even point in units and dollars?arrow_forwardSensitivity Cost-Volume-Profit Analysis and Production Versus Period Costs, Multiple-Product Setting If both the variable and fixed production costs (refer to your answer to Requirement 1) associated with the canoe product line increased by 5% (beyond the estimate from the high-low analysis), how many canoes and paddles would need to be sold in order to earn a target income of 96,000? Assume the same sales mix and additional fixed costs as in Requirement 3.arrow_forwardManufacturing builds and sells switch harnesses for glove boxes. The sales price and variable cost for each follows: Their sales mix is reflected in the ratio 4:4:1. If annual fixed costs shared by the three products are $1 8840 how many units of each product will need to be sold in order forJj to break even?arrow_forward
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