Question

Personal Electronix sells computer tablets and MP3 players. The business is divided into two divisions along product lines. CVP income statements for a recent quarter’s activity are presented below. Tablet Division MP3 Player Division Total Sales $600,000 $400,000 $1,000,000 Variable costs 420,000 260,000 680,000 Contribution margin $180,000 $140,000 320,000 Fixed costs 120,000 Net income $200,000 Determine sales mix percentage and contribution margin ratio for each division. Sales Mix Percentage Tablet division 60 % MP3 Player division 40 % Contribution Margin Ratio Tablet division 30 % MP3 Player division 35 % LINK TO TEXT Calculate the company’s weighted-average contribution margin ratio. (Round computations and final answer to 2 decimal places, e.g. 15.26%.) Weighted-average contribution margin ratio % LINK TO TEXT Calculate the company’s break-even point in dollars. (Round computations to 2 decimal places and final answer to 0 decimal places, e.g. 1,526.) Break-even point $ LINK TO TEXT Determine the sales level in dollars for each division at the break-even point. (Round computations to 2 decimal places and final answers to 0 decimal places, e.g. 1,526.) Break-even point Tablet division $ MP3 Player division $

Answer 1

a)Weighted average contribution margin ratio = Total contribution /Total sales

                                      = 320000 /1000000

                                      = .32 or 32%

b)Breakeven point =Fixed cost /Weighted average contribution margin ratio

              = 120000 / .32

                 = $ 375000

c)

Division	sales mix	Dollar sales
Tablet divison	60%	375000*60%= 225000
Player division	40%	375000*40%= 150000