Question

Current Designs manufactures two different types of kayaks, rotomoulded kayaks and composite kayaks. The following information is available for each product line. Rotomoulded Composite Sales price/unit $1,120 $2,360 Variable costs/unit $670 $1,580 The company’s fixed costs are $968,000. An analysis of the sales mix identifies that rotomoulded kayaks make up 80% of the total units sold.

Determine the weighted-average unit contribution margin for Current Designs. Weighted-average unit contribution margin $

Determine the break-even point in units for Current Designs and identify how many units of each type of kayak will be sold at the break-even point. (Round answers to 0 decimal places, e.g. 5,275.) Break-even Sales units Rotomolded Kayaks Composite Kayaks Break-even Sales Distribution units units

Assume that the sales mix changes, and rotomoulded kayaks now make up 70% of total units sold. Calculate the total number of units that would need to be sold to earn a net income of $2.36 million and identify how many units of each type of kayak will be sold at this level of income. (Round answers to 0 decimal places, e.g. 5,275.) Required Sales units Rotomolded Kayaks Composite Kayaks Break-even Sales Distribution units units

Assume that Current Designs will have sales of $3.60 million with two-thirds of the sales dollars in rotomoulded kayaks and one third of the sales dollars in composite kayaks. Assuming $779,000 of fixed costs are allocated to the rotomoulded kayaks and $189,000 to the composite kayaks, prepare a CVP income statement for each product line. (Round answers to 0 decimal places, e.g. 5,275.) Rotomolded Kayaks Composite Kayaks   Administrative Expenses/ Gross Profit/Sales/Contribution Margin/Variable Cost/Fixed Costs/Selling Expenses/Net Income (Loss) $ $   Administrative Expenses/ Gross Profit/Sales/Contribution Margin/Variable Cost/Fixed Costs/Selling Expenses/Net Income (Loss) Administrative Expenses/ Gross Profit/Sales/Contribution Margin/Variable Cost/Fixed Costs/Selling Expenses/Net Income (Loss) Administrative Expenses/ Gross Profit/Sales/Contribution Margin/Variable Cost/Fixed Costs/Selling Expenses/Net Income (Loss)   Administrative Expenses/ Gross Profit/Sales/Contribution Margin/Variable Cost/Fixed Costs/Selling Expenses/Net Income (Loss) $ $

Calculate the degree of operating leverage for each product line. (Round answers to 2 decimal places, e.g. 52.75.) Rotomolded Kayaks Composite Kayaks Degree of operating leverage

Answer 1