Question

In: Accounting

Madison Corporation sells three products (M, N, and O) in the following mix: 3:1:2. Unit price...

Madison Corporation sells three products (M, N, and O) in the following mix: 3:1:2. Unit price and cost data are:

	M		N		O
Unit sales price	$	9	$	7	$	8
Unit variable costs		5		4		7

Total fixed costs are $340,000. The selling price per composite unit for the current sales mix (rounded to the nearest cent) is:

Multiple Choice

$24.00.
$ 8.00.
$26.00.
$50.00.
$34.00.

A company manufactures and sells a product for $50 per unit. The company's fixed costs are $168,000, and its variable costs are $15 per unit. The company's break-even point in sales dollars is: (Round your intermediate calculations to two decimal places.)

Multiple Choice
$230,500.
$168,000.
$4,800.
$240,000.
$183,500.

A firm sells two products, Regular and Ultra. For every unit of Regular sold, two units of Ultra are sold. The firm's total fixed costs are $1,536,000. Selling prices and cost information for both products follow. What is the firm's break-even point in units of Regular and Ultra?

Product Unit Sales Price Variable Cost Per Unit

Regular $ 22 $ 8

Ultra 25 8

Multiple Choice
32,000 Regular units and 32,000 Ultra units.
32,000 Regular units and 64,000 Ultra units.
10,667 Regular units and 21,333 Ultra units.
37,333 Regular units and 74,667 Ultra units.
64,000 Regular units and 32,000 Ultra units.

Expert Solution

1.

Madison Corporation sells three products (M, N, and O) in the following mix: 3:1:2. the selling price per unit is given as follows: M = $ 9 , N= $ 7 and O = $ 8.

Here the Composite saling price means the selling price of each units combined in the proportion given so , the sales per unit = Selling price * weights

Thus for M = $9 * 3 = $ 27. , For N = $ 7 * 1 = $ 7 and For O = $ 8 * 2 = $ 16 ,

So the selling price per composite unit for the current sales mix = $ 50 ( 27 + 7 +16 ).

Thus the correct options is ---------D i.e $ 50.

2.

Selling price per unit = $50 , and fixed cost = $ 168000 , and variable cost given = $ 15 per unit,

So Contribution margin per unit = selling price - variable cost = $ 50- $ 15 = $ 35.

Here Contribution Margin % = Contribution / Sales = $ 35 / 50 = 70%

So the Break even points in sales dollars = Fixed Cost / Contribution % = $16800 / 70% = $ 240000.

Thus the correct options is ---------D i.e $ 240,000

3.

Here the total fixed cost is given and no seperate allocation basis of fixed cost is given so direct breakeven calculation of two products are not posiible:

In order to calculate the break even we need to get the break even of the combined products then divide it on the basis of 1:2 as given,

A) For Regular : sales per unit = $ 22 and variable cost per unit = $ 8 , thus the contribution margin per unit = Sales - variable cost -= $ 22 - $8 = $ 14..

B) Since for 1 unit of regular ultra has 2 units of sales, thus the sales = $ 25*2 = $ 50, and variable cost = $ 8*2 = $ 16, so the contribution margin per unit = $ 34 ( 50- 16).

We have combined data of 1 regular and 2 ultra product as follows: Sales = $ 72 ( 22+50) , variable cost = $ 24 ( 8 + 16) and contribution margin per unit = $ 48 ( 14 + 34).

So for the company the break even sales in units = Fixed cost / Contribution margin per units combined.

Company break even sales in units = $ 1536000 / 48 = 32000 units .

Deviding this in 1 :2 for regular and Ultra = For regular = 10667 units and for Ultra = 21333 units.

Thus the correct option ------- C i.e 10,667 Regular units and 21,333 Ultra units.

ekkarill92 answered 2 years ago

A company sells three products A, B and C in a 3:3:4 sales mix. Sales price: ...

A company sells three products A, B and C in a 3:3:4 sales mix. Sales price: A - $10 B -$8 C - $6 Variable cost: A - $7 B- $3 C - $3 Quantity sold A 6,000 B6000 C8000 Fixed costs are $36,000 A) 6% - Calculate breakeven in total sales dollars and in units of the 3 products B) 5% - What is the total income the company can earn with this sales mix? Say the sales...

Algorithm problem 4 [3.1-4] Is (2^(n+1))∈O(2^n)? Is (2^(2n))∈O(2^n)?

Multiple Product Break-Even and Net Income Planning Madison Company manufactures and sells the following three products:...

Multiple Product Break-Even and Net Income Planning Madison Company manufactures and sells the following three products: Red Blue Green Unit sales 20,000 30,000 50,000 Unit sales price $30 $62 $18 Unit variable cost $18 $38 $14 Assume that total fixed cost is $324,800. a. Compute the net income before income tax based on the sales volumes shown above. Red Blue Green Unit contribution margin Answer Answer Answer Total contribution margin Answer Answer Answer Net income before income tax $Answer b....

Prove via induction the following properties of Pascal’s Triangle: •P(n,2)=(n(n-1))/2 • P(n+m+1,n) = P(n+m,n)+P(n+m−1,n−1)+P(n+m−2,n−2)+···+P(m,0) for all...

Prove via induction the following properties of Pascal’s Triangle: •P(n,2)=(n(n-1))/2 • P(n+m+1,n) = P(n+m,n)+P(n+m−1,n−1)+P(n+m−2,n−2)+···+P(m,0) for all m ≥ 0

1- Show that (n^3+3n^2+3n+1) / (n+1) is O (n2 ). Use the definition and proof of...

1- Show that (n^3+3n^2+3n+1) / (n+1) is O (n2 ). Use the definition and proof of big-O notation. 2- Prove using the definition of Omega notation that either 8 n is Ω (5 n ) or not. please help be with both

The Nutmeg Corporation produces three different? products, each in a? 1-pound can:? Almond-Lovers Mix,? Walnut-Lovers Mix,...

The Nutmeg Corporation produces three different? products, each in a? 1-pound can:? Almond-Lovers Mix,? Walnut-Lovers Mix, and Thrifty Mix. Three types of nuts are used in? Nutmeg's products:? almonds, walnuts, and peanuts. Nutmeg currently has 400 pounds of? almonds,200pounds of? walnuts, and 1,000 pounds of peanuts. Each of? Nutmeg's products must contain a certain percentage of each type of? nut, as shown in the following table. The table also shows the revenue per can as well as the cost per...

3. Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and...

3. 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: Product Sales Price per Unit Variable Cost per Unit AA $55 $25 BB 45 20 CC 30 5 Their sales mix is reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $275,000 per year. A. What are total variable costs for Morris with their current product mix? Total...

Price change to maximize profit. A business sells n products, and is considering changing the price...

Price change to maximize profit. A business sells n products, and is considering changing the price of one of the products to increase its total profits. A business analyst develops a regression model that (reasonably accurately) predicts the total profit when the product prices are changed, given by Pˆ = βT x + P , where the n-vector x denotes the fractional change in the product prices, xi = (pnew − pi)/pi. Here P is the profit with the currentiprices,...

Use Java for the following; Part 1 n!= n * (n –1)* (n–2)* ...* 3 *...

Use Java for the following; Part 1 n!= n * (n –1)* (n–2)* ...* 3 * 2 * 1 For example, 5! = 5 * 4 * 3 * 2 * 1 = 120 Write a function called factorial that takes as input an integer. Your function should verify that the input is positive (i.e. it is greater than 0). Then, it should compute the value of the factorial using a for loop and return the value. In main, display...

Consider the following reaction between oxides of nitrogen:NO 2 1 g 2 + N 2 O...

Consider the following reaction between oxides of nitrogen:NO 2 1 g 2 + N 2 O 1 g 2 ¡ 3 NO 1 g 2 (a) Use data in Appendix C to predict how ∆ G for the reac-tion varies with increasing temperature. (b) Calculate ∆ G at 800 K, assuming that H ° and S ° do not change with tem-perature. Under standard conditions is the reaction sponta-neous at 800 K? (c) Calculate ∆ G at 1000 K. Is...