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In: Accounting

Exercise 6-9 (Video) Tiger Golf Accessories sells golf shoes, gloves, and a laser-guided range-finder that measures...

Exercise 6-9 (Video)

Tiger Golf Accessories sells golf shoes, gloves, and a laser-guided range-finder that measures distance. Shown below are unit cost and sales data.

Pairs of
Shoes

Pairs of
Gloves

Range-
Finder

Unit sales price $105 $33 $242
Unit variable costs 58 10 205
Unit contribution margin $47 $23 $37
Sales mix 32 % 44 % 24 %

Fixed costs are $653,568.
Calculate weighted-average unit contribution margin. (Round answer to 2 decimal places e.g. 10.25.)
Weighted-average unit contribution margin $
Compute the break-even point in units for the company.
Break-even point units
Determine the number of units to be sold at the break-even point for each product line.
Shoes pairs of shoes
Gloves pairs of gloves
Range Finders range-finders
Verify that the mix of sales units to be sold at the break-even point for each product line will generate a zero net income.
Tiger Golf Accessories
CVP Income Statament

    Contribution Margin    Fixed Costs    Gross Profit    Net Income (Loss)    Sales - Gloves    Sales - Range-Finders    Sales - Shoes    Total Sales    Variable Costs    

$

    Contribution Margin    Fixed Costs    Gross Profit    Net Income (Loss)    Sales - Gloves    Sales - Range-Finders    Sales - Shoes    Total Sales    Variable Costs    

    Contribution Margin    Fixed Costs    Gross Profit    Net Income (Loss)    Sales - Gloves    Sales - Range-Finders    Sales - Shoes    Total Sales    Variable Costs    

Contribution MarginFixed CostsGross ProfitNet Income (Loss)Sales - GlovesSales - Range-FindersSales - ShoesTotal SalesVariable Costs

$

    Contribution Margin    Fixed Costs    Gross Profit    Net Income (Loss)    Sales - Gloves    Sales - Range-Finders    Sales - Shoes    Total Sales    Variable Costs    

Contribution MarginFixed CostsGross ProfitNet Income (Loss)Sales - GlovesSales - Range-FindersSales - ShoesTotal SalesVariable Costs

$

    Contribution Margin    Fixed Costs    Gross Profit    Net Income (Loss)    Sales - Gloves    Sales - Range-Finders    Sales - Shoes    Total Sales    Variable Costs    

Contribution MarginFixed CostsGross ProfitNet Income (Loss)Sales - GlovesSales - Range-FindersSales - ShoesTotal SalesVariable Costs

$

Solutions

Expert Solution

Answer a.

Weighted Average Unit Contribution Margin = 0.32 * $47.00 + 0.44 * $23.00 + 0.24 * $37.00
Weighted Average Unit Contribution Margin = $34.04

Answer b.

Breakeven Point = Fixed Costs / Weighted Average Unit Contribution Margin
Breakeven Point = $653,568 / $34.04
Breakeven Point = 19,200 units

Answer c.

Breakeven Point for Shoes = 0.32 * 19,200
Breakeven Point for Shoes = 6,144 units

Breakeven Point for Gloves = 0.44 * 19,200
Breakeven Point for Gloves = 8,448 units

Breakeven Point for Range-Finder = 0.24 * 19,200
Breakeven Point for Range-Finder = 4,608 units

Answer d.

Variable Costs - Shoes (6,144 * $58) = $356,352
Variable Costs - Gloves (8,448 * $10) = $84,480
Variable Costs - Range-Finders (4,608 * $205) = $944,640

Total Variable Costs = $356,352 + $84,480 + $944,640
Total Variable Costs = $1,385,472


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