Question

XYZ is the maker of high quality golf bags. The company currently has three different lines of bags, which it sells to sporting goods stores and golf shops throughout the world.
XYZ sells a constant mix of 1 medium-sized bags for 2 small bag and 4 medium bags for 3 large-sized bag.
Total fixed costs for the year are expected to be					2027562
Note: round all decimals to three places in the computation
		Small	Medium	Large
Selling price per bag		100	150	250
Variable cost per bag		60	96	160
The weighted average contribution margin ratio for the large bag is:?
Note: round final answer to three decimal places
The breakeven point in units for the medium-sized bags would be:?
Note: round final answer up to nearest whole unit

Answer 1

Particulars	Small	Medium	Large
Selling Price per Bag	100	150	250
Less: Variable Costs per Bag	60	96	160
Contribution Margin per Bag	40	54	90

Ratio of Units Sold = For Every 15 Units Sold by Company 8 Units are Sold for Small Bag, 4 Units for Medium Bag and 3 Units for Large Bag.

For 4 Medium Bag = 3 Large Bags are Sold

For 4 Medium Bag = 8 Smaller Bags (for every 1 medium bag 2 small bags are sold)

Particulars	Small	Medium	Large
Units Sold	8	4	3
* Contribution Margin per Unit	40	54	90
Total Contribution Margin	320	216	270

Total Contribution Margin = 320 + 216 + 270= $ 806

Particulars	Small	Medium	Large
Units Sold	8	4	3
* Sales Price per Unit	100	150	250
Total Sales Revenue	800	600	750

Total Sales Revenue = 800 + 600 + 750 = $ 2150

Weighted Average Contribution Margin Ratio = Total Contribution Margin / Total Sales Revenue * 100

Weighted Average Contribution Margin Ratio = 806 / 2150 * 100

Weighted Average Contribution Margin Ratio = 37.488%

Weighted Average Contribution Margin Ratio for Large Bag = 37.488%

Part B

Weighted Average Contribution Margin per Unit = Total Contribution Margin / Total Contribution Margin on Sale of 15 Units

= 816 /15

= $ 54.40 per Unit

Break Even Point in Units = Total Fixed Costs / Weighted Average Contribution Margin per Unit

Total Fixed Costs = $ 20,27,562

Break Even Point in Units = 20,27,562 / 54.4

Break Even Point in Units = 37,271 Units

Break Even Point in Units for Medium = Break Even Point in Units * 4/15

= 37,271 * 4/15

Break Even Point in Units for Medium = 9,939 Units