Question
In: Accounting
Multiple Products Bone-Brain, Inc. had three products: a foot manicure kit (unit sales price $55; unit...
Multiple Products
Bone-Brain, Inc. had three products: a foot manicure kit (unit sales price $55; unit variable cost $25); a hand manicure kit (unit sales price $40; unit variable cost $15); and a hair kit (unit sales price, $75; unit variable cost $30). The company’s sales mix of the products was 3:1:1 respectively. Fixed costs were $33,000 in total. Desired ending inventory was 5,500 units spread 2:2:1 respectively.
Required: compute a) the weighted-average contribution margin, b) the weighted-average breakeven point, and c) the breakeven point for each product
Solutions
Expert Solution
Given Information,
Bone Brain Inc
| Products | Unit Sales Price | Unit Variable cost |
| Foot Manicure Kit | $55 | $25 |
| Hand Manicure Kit | $40 | $15 |
| Hair Kit | $75 | $30 |
Sales Mix of products=3:1:1 ,Fixed Cost =$33000
Ending Inventory =5500 units
| Products | Ending Inventory Mix | Ending Inventory |
| Foot Manicure Kit | 2 | 5500*2/5=2200 |
| Hand Manicure Kit | 2 | 5500*2/5=2200 |
| Hair Kit | 1 | 5500*1/5=1100 |
| Total | 5 | 5500 |
a) Computation of Weighted average Contribution Margin
Contribution Margin=Sales -Variable Cost
Method 1=
Weight
X Contribution=$32
| Products | Unit Sales Price | Unit Variable cost | Contribution=Sales-Variable Cost | Sales Mix | Weight | Weighted Average Contribution Margin |
| Foot Manicure Kit | $55 | $25 | $30 | 3 | 0.6 | $18 |
| Hand Manicure Kit | $40 | $15 | $25 | 1 | 0.2 | $5 |
| Hair Kit | $75 | $30 | $45 | 1 | 0.2 | $9 |
| Total | 5 | 1 | $32 |
Method 2=Combined contribution margins/total number of Sales Mix.
=$160/$5
=$32 per Unit
| Products | Unit Sales Price | Unit Variable cost | Contribution=Sales-Variable Cost | Sales Mix | Combined Contribution margin |
| Foot Manicure Kit | $55 | $25 | $30 | 3 | $90 |
| Hand Manicure Kit | $40 | $15 | $25 | 1 | $25 |
| Hair Kit | $75 | $30 | $45 | 1 | $45 |
| Total | $5 | $160 |
b) Computation of Weighted average Breakeven Point
BEP in Units=Total fixed Cost/Weighted Average Contribution Margin per unit
=$33000/$32
=1031 Units ( Rounded off )
C) Break even Point for Each product
| Products | Sales Mix Ratio | Break even Units |
| Foot Manicure Kit | 3 | 1031.*3/5=619 units |
| Hand Manicure Kit | 1 | 1031*1/5=206 units |
| Hair Kit | 1 | 1031*1/5=206 units |
| 5 | 1031 units |
The company must produce and sell 619 units of Foot Manicure Kit ,206 units of Hand Manicure Kit, and 206 units of Hair Kit in order to break even.
Break even in Dollar=$57735
| Products | Unit Sales Price | Break even Units | Break even Sales in Dollars=Sale price X Break even Units |
| Foot Manicure Kit | $55 | 619 | $34,045 |
| Hand Manicure Kit | $40 | 206 | $8,240 |
| Hair Kit | $75 | 206 | $15,450 |
| $57,735 |
ekkarill92 answered 1 year agoRelated Solutions
Garson, Inc. produces three products. Data concerning the selling prices and unit costs of the three...
Garson, Inc. produces three products. Data concerning the
selling prices and unit costs of the three products appear
below:
Product
F
G
H
Selling price
$
60
$
40
$
70
Variable costs
$
25
$
15
$
30
Fixed costs
$
50
$
5
$
47
Milling machine time (minutes)
10
5
5
Fixed costs are applied to the products on the basis of direct
labor hours.
Demand for the three products exceeds the company's productive
capacity. The milling...
Garson, Inc. produces three products. Data concerning the selling prices and unit costs of the three...
Garson, Inc. produces three products. Data concerning the
selling prices and unit costs of the three products appear
below:
Product
F
G
H
Selling price
$
75
$
55
$
85
Variable costs
$
50
$
40
$
55
Fixed costs
$
45
$
8
$
42
Milling machine time (minutes)
10
5
5
Fixed costs are applied to the products on the basis of direct
labor hours.
Demand for the three products exceeds the company's productive
capacity. The milling...
Malibu, Inc., which has fixed costs of $2,978,000, sells three products whose sales price, variable cost...
Malibu, Inc., which has fixed costs of $2,978,000, sells three
products whose sales price, variable cost per unit, and percentage
of sales units are presented in the table below.
Product A
Product B
Product C
Sales Price
$
8.00
$
13.00
$
30.00
Variable Cost
$
5.00
$
5.00
$
16.00
Product Mix
60
%
20
%
20
%
a. What is the weighted average unit contribution
margin? (Round your answer to 2 decimal
places.)
b. At the break-even...
25) A company sells two products with information as follows: A B Sales price per unit...
25) A company sells two products with information as
follows:
A
B
Sales price per unit
$12
$28
Variable cost per unit
$10
$12
The products are machine made. Four units of product A can be
made with one machine hour and two units of product B can be made
with one machine hour. The company has a maximum of 5,000 machine
hours available per month. The company can sell up to 18,000 units
of product A per month, and...
BACKGROUND The company ABC, L.C. manufactures some products with an average sales price of € 25/unit,...
BACKGROUND
The company ABC, L.C. manufactures some products with an average
sales price of € 25/unit, with fixed annual costs of € 110,000. The
average unit variable costs are € 5.
DEVELOP
a) At what volume of production will the threshold of
profitability be reached?
b) Assuming that annual sales are estimated at 20,000 units,
being the distribution evenly over a year, on what date will the
break-even point be reached?
c) What would be the sales value or turnover...
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...
Superior Technologies Inc. sells a product at the unit price of $2,000. Its credit sales in...
Superior Technologies Inc. sells a product at the unit price of
$2,000. Its credit sales in the 2019 financial year were reported
at 500 units. The variable cost per unit is $1,350. The firm is now
considering a tightening of credit standards that is expected to
result in the following: (1) a 10% decrease in unit sales; (2) a
decrease in bad-debts expense from 2.0% to 1.0% of sales; (3) a
decrease of $2,000 in collection expenses and (4) a...
National Co. manufactures and sells three products: red, white, and blue. Their unit sales prices are...
National Co.
manufactures and sells three products: red, white, and blue. Their
unit sales prices are red, $46; white, $76; and blue, $101. The per
unit variable costs to manufacture and sell these products are red,
$31; white, $51; and blue, $71. Their sales mix is reflected in a
ratio of 2:2:1 (red:white:blue). Annual fixed costs shared by all
three products are $141,000. One type of raw material has been used
to manufacture all three products. The company has developed...
National Co. manufactures and sells three products: red, white, and blue. Their unit sales prices are...
National Co.
manufactures and sells three products: red, white, and blue. Their
unit sales prices are red, $47; white, $77; and blue, $102. The per
unit variable costs to manufacture and sell these products are red,
$32; white, $52; and blue, $72. Their sales mix is reflected in a
ratio of 5:4:2 (red:white:blue). Annual fixed costs shared by all
three products are $142,000. One type of raw material has been used
to manufacture all three products. The company has developed...
National Co. manufactures and sells three products: red, white, and blue. Their unit sales prices are...
National Co. manufactures and sells three products: red, white,
and blue. Their unit sales prices are red, $53; white, $83; and
blue, $108. The per unit variable costs to manufacture and sell
these products are red, $38; white, $58; and blue, $78. Their sales
mix is reflected in a ratio of 5:4:2 (red:white:blue). Annual fixed
costs shared by all three products are $148,000. One type of raw
material has been used to manufacture all three products. The
company has developed...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Partial Pressure/Total Pressure Question Consider the equation: (CH3)2N2H2(l) + 2N2O4(l) ---> 3N2(g) + 4H2O(g) + 2CO2(g)...
- Can you show how to do this step by step using Matlab please. Write a function...
- Plaintiff died of gas asphyxiation when he entered a sewer tunnel without a mask to answer...
- Retail Co has a unique set of HR practices. Describe and evaluate how you think the...
- Discuss some of the ways artists experimented with new styles and techniques, and how these differed...
- What is the recurrence relation for T(n) = (n-1)T(n-1) + n?
- Q2: Specify any four difference between Client/Server computing and Peer-to-Peer computing. Which architecture used by Bitcoin...
ADVERTISEMENT