Question

Stewart Co. is the producer of tires. They sell a constant mix of 3 Medium sized tires for every 2 small tires, and 4 medium tires for every 3 large tires.

Total fixed costs for the year are 2,037,550

(round all intermediate calculations to three decimal places)

  

Selling price per tire Small:100 Medium:150 Large:250

Variable Cost per tire S:60 M:96 L:160

What is the weighted average contribution margin ratio for each sized tire?

What is the breakeven point for each sized tire?

Answer 1

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Stewart
Answer 1	Small	Medium	Large	Total	Note
Price per unit	100.00	150.00	250.00
Less: Variable cost per unit	60.00	96.00	160.00
Contribution per unit	40.00	54.00	90.00		A
Sales Mix	8.00	12.00	9.00	29.00	B
Total contribution per unit	320.00	648.00	810.00	1,778.00	C=A*B
Weighted average contribution per unit				61.310	D=C/B
Fixed costs				2,037,550.00	E
Total Break even units				33,234.00	F=E/D
Break even units- Product wise	9,168.00	13,752.00	10,314.00	33,234.00	G=F/B*B