Question
In: Accounting
1. Glacial Springs produces and sells water filtration systems for homeowners. Information regarding its three models...
1. Glacial Springs produces and sells water filtration systems
for homeowners. Information regarding its three models is shown
below.
| Basic | Basic Plus | Premium | Total | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Units sold | 540 | 300 | 360 | 1,200 | |||||||
| Selling price | $240 | $435 | $755 | ||||||||
| Variable cost | $185 | $270 | $430 | ||||||||
3. The Richibouctou Inn is trying to determine its break-even
point. The inn has 71 rooms available that are rented at $60 a
night. Operating costs are as follows:
| Salaries | $9,240 | per month | Maintenance | $480 | per month | |||
| Utilities | $1,930 | per month | Housekeeping service | $6 | per room | |||
| Depreciation | $1,310 | per month | Other costs | $24 | per room |
Determine the inn’s break-even point in the number of rented rooms per month and dollars.
If the inn plans on renting 32 rooms per day (assuming a 30-day month), what is the monthly margin of safety in dollars and the margin of safety ratio?
The company’s total fixed costs to produce the filtration systems
are $199,470.
Determine the sales mix as a function of units sold for the
three products.
| Sales mix | ||||
|---|---|---|---|---|
| Basic | % | |||
| Basic Plus | % | |||
| Premium |
Determine the weighted-average unit contribution margin. (Round answer to 2 decimal places, e.g. 15.25.
Determine the total number of units that the company must sell to break even.
Determine the number of units of each model that the company must sell to break even.
2. Determine the missing amounts:
| Unit Selling Price | Unit Variable Costs | Contribution Margin per Unit |
Contribution Margin Ratio |
||||||
| 1. | $850 | $595 | $ | % | |||||
| 2. | $450 | $ | $225 | % | |||||
| 3. | $ | $ | $430 | 25% |
3.
Solutions
Expert Solution
1. Sales Mix
Total Units Sold = 1,200
Sales Mix for Basic = 540/1,200
=45%
Sales Mix for Basic plus = 300/1,200
=25%
Sales Mix for Premium = 360/1,200
=30%
2.
| Basic | Basic Plus | Premium | Total | |
| Sales | 240.00 | 435.00 | 755.00 | 1,430.00 |
| Variable Cost | 185.00 | 270.00 | 430.00 | 885.00 |
| Contribution | 55.00 | 165.00 | 325.00 | 545.00 |
| Sales Mix | 45% | 25% | 30% | |
| Weighted Average Contribution Margin | 24.75 | 41.25 | 97.50 | 163.50 |
3.
Fixed Cost = 199,470
Break-even point in units = 199,470/163.50
=1,220 Units
4. Basic = 1,220 x 45% = 549 Units
Basic Plus = 1,220 x 25% = 305 Units
Premium = 1,220 x 30% = 366 Units
| Unit Selling Price | Variable cost | Contribution Margin | Contribution Margin ratio | |
| 1 | 850.00 | 595.00 | 255.00 | 30% |
| 2 | 450.00 | 225.00 | 225.00 | 50% |
| 3 | 1,720.00 | 1,290.00 | 430.00 | 25% |
ekkarill92 answered 2 years agoRelated Solutions
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