Question

In: Accounting

Tiago makes three models of camera lens. Its product mix and contribution margin per unit follow:...

Tiago makes three models of camera lens. Its product mix and contribution margin per unit follow:

Percentage of Unit sales Contribution Margin per unit
Lens A 42 % $ 36
Lens B 29 28
Lens C 29 41


Suppose the product mix has shifted to 47/27/26.

Required:
1. Determine the new weighted-average contribution margin per unit. (Round your intermediate calculation to 2 decimal places. Round your answer to 2 decimal places.)



2. Determine the number of units of each product that Tiago must sell to break even if fixed costs are $190,000. (Round intermediate calculations to nearest whole number. Round your answers up to the next whole number.)



3. Determine how many units of each product must be sold to generate a profit of $68,000. (Round intermediate calculations to nearest whole number. Round your answers up to the next whole number.)

Solutions

Expert Solution

Requirement 1

A

Contribution Margin per unit

$ 36.00

$28.00

$ 41.00

B

Product Mix

42.00%

29.00%

29.00%

100.00%

C = A x B

Weighted Average Contribution Margin

$ 15.12

$ 8.12

$ 11.89

$ 35.13

Weighted average Contribution margin=$35.13 per unit

Requirement 2

A

Total Fixed Cost

$ 190,000.00

B

Weighted Average Contribution Margin

$             35.13

C = A/B

Multi Product Break Even point

          5,408.48

C x 42%

Lens A

                2,272

C x 29%

Lens B

                1,568

C x 29%

Lens C

                1,568

Breakeven units

Lens A=2272 units

Lens B=1568 units

Lens C=1568 units

Requirement 3

A

Total Fixed Cost +Profit

$ 258,000.00

B

Weighted Average Contribution Margin

$             35.13

C = A/B

Multi Product Break Even point

         7,344.15

C x 42%

Lens A

                3,085

C x 29%

Lens B

                2,130

C x 29%

Lens C

                2,130

Units to be sold to earn a profit of 68000

Units of Lens A=3085

Lens B=2130

Lens C=2130

ekkarill92 answered 2 years ago
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