Question

Personal Electronix sells iPads and iPods. The business is divided into two divisions along product lines. CVP income statements for a recent quarter’s activity are presented below.

		iPad Division		iPod Division		Total
Sales		$755,200		$424,800		$1,180,000
Variable costs		543,744		246,384		790,128
Contribution margin		$211,456		$178,416		389,872
Fixed costs						133,151
Net income						$256,721

Determine sales mix percentage and contribution margin ratio for each division. (Round answers to 0 decimal places, e.g. 15%.)

		Sales Mix Percentage
iPad division		enter a percentage number rounded to 0 decimal places %
iPod division		enter a percentage number rounded to 0 decimal places %

		Contribution Margin Ratio
iPad division		enter a percentage number rounded to 0 decimal places %
iPod division		enter a percentage number rounded to 0 decimal places %

eTextbook and Media

Calculate the company’s weighted-average contribution margin ratio. (Round computations and final answer to 2 decimal places, e.g. 15.26%.)

Weighted-average contribution margin ratio

enter a percentage number of the weighted-average contribution margin ratio rounded to 2 decimal places %

eTextbook and Media

Calculate the company’s break-even point in dollars. (Round computations to 2 decimal places and final answer to 0 decimal places, e.g. 1,526.)

Break-even point

$enter the break-even point in dollars rounded to 2 decimal places

eTextbook and Media

Determine the sales level in dollars for each division at the break-even point. (Round computations to 2 decimal places and final answers to 0 decimal places, e.g. 1,526.)

		Break-even point
iPad division		$enter a dollar amount rounded to 2 decimal places
iPod division		$enter a dollar amount rounded to 2 decimal places

Answer 1

	Sales Mix Percentage
iPad Division ($755200/$1180000)	64%
iPod Division ($424800/$1180000)	36%
	Contribution Margin Ratio
iPad Division ($211456/$755200)	28%
iPod Division ($178416/$424800)	42%

Weighted average contribution margin ratio

33.04%

Weighted average contribution margin ratio = (0.64 x 0.28) + (0.36 x 0.42) = 17.92 + 15.12 = 33.04%

Break-even point ($133151/33.04%)

$                            402,999.39

	Break-even point
iPad Division ($402999.39 x 64%)	$                            257,919.61
iPod Division ($402999.39 x 36%)	$                            145,079.78

Note: Kindly re-confirm whether break-even point and break-even for both divisions is to be rounded off to 0 decimal places or 2 decimal places since the instructions mention both.