Question

CVP Analysis of Multiple Products

Steinberg Company produces commercial printers. One is the regular model, a basic model that is designed to copy and print in black and white. Another model, the deluxe model, is a color printer-scanner-copier. For the coming year, Steinberg expects to sell 80,000 regular models and 16,000 deluxe models. A segmented income statement for the two products is as follows:

		Regular Model		Deluxe Model		Total
Sales		$12,000,000		$10,720,000		$22,720,000
Less: Variable costs		7,200,000		6,432,000		13,632,000
Contribution margin		$4,800,000		$4,288,000		$9,088,000
Less: Direct fixed costs		1,200,000		960,000		2,160,000
Segment margin		$3,600,000		$3,328,000		$6,928,000
Less: Common fixed costs						1,475,200
Operating income						$5,452,800

Required:

1. Compute the number of regular models and deluxe models that must be sold to break even. Round your answers to the nearest whole unit.

Regular models	fill in the blank 1 units
Deluxe models	fill in the blank 2 units

2. Using information only from the total column of the income statement, compute the sales revenue that must be generated for the company to break even. Round the contribution margin ratio to four decimal places. Use the rounded value in the subsequent computation. (Express as a decimal-based amount rather than a whole percentage.) Round the amount of revenue to the nearest dollar.

Contribution margin ratio	fill in the blank 3
Revenue

Answer 1

1. The computation of the number of regular models and deluxe models is shown below:-

Sales mix of Regular models to deluxe models= 80,000:16,000= 5:1

With the help of the below formulas:-

Now,

With the help of the below formulas:-

2. The computation of sales revenue is shown below:-

With the help of given formulas:-