Question

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.)

Answer 1

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