In: Accounting
Current Designs manufactures two different types of kayaks, rotomolded kayaks and composite kayaks. The following information is available for each product line.
Rotomolded | Composite | ||||
Sales price/unit | $800 | $2,000 | |||
Variable costs/unit | $480 | $1,340 |
The company’s fixed costs are $706,160. An analysis of the sales
mix identifies that rotomolded kayaks make up 80% of the total
units sold.
Correct answer iconYour answer is correct.
Determine the weighted-average unit contribution margin for Current Designs.
Weighted-average unit contribution margin | $ |
eTextbook and Media
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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.
Break-even sales | units |
Rotomolded Kayaks | Composite Kayaks | |||||
Break-even sales distribution | units | units |
eTextbook and Media
Incorrect answer iconYour answer is incorrect.
Assume that the sales mix changes, and rotomolded 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 $1,724,560 and identify how many units of each
type of kayak will be sold at this level of income.
Required sales | units |
Rotomolded Kayaks | Composite Kayaks | |||||
Break-even sales distribution | units | units |
eTextbook and Media
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Assume that Current Designs will have sales of $2,700,000 with two-thirds of the sales dollars in rotomolded kayaks and one-third of the sales dollars in composite kayaks. Assuming $568,000 of fixed costs are allocated to the rotomolded kayaks and $138,160 to the composite kayaks, prepare a CVP income statement for each product line.
Rotomolded Kayaks | Composite Kayaks | |||
Administrative ExpensesContribution MarginFixed CostsGross ProfitNet Income / (Loss)SalesSelling ExpensesVariable Costs |
$ |
$ |
||
Administrative ExpensesContribution MarginFixed CostsGross ProfitNet Income / (Loss)SalesSelling ExpensesVariable Costs | ||||
Administrative ExpensesContribution MarginFixed CostsGross ProfitNet Income / (Loss)SalesSelling ExpensesVariable Costs | ||||
Administrative ExpensesContribution MarginFixed CostsGross ProfitNet Income / (Loss)SalesSelling ExpensesVariable Costs | ||||
Administrative ExpensesContribution MarginFixed CostsGross ProfitNet Income / (Loss)SalesSelling ExpensesVariable Costs |
$ |
$ |
eTextbook and Media
Incorrect answer iconYour answer is incorrect.
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 |