Question
In: Accounting
Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill,...
Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker. In the coming year, Texas-Q expects to sell 18,400 portable grills, 46,000 stationary grills, and 4,600 smokers. Information on the three models is as follows: Portable Stationary Smokers Price $92 $201 $252 Variable cost per unit 45 135 144 Total fixed cost is $2,064,960. Required:
1. What is the sales mix of portable grills to stationary grills to smokers?
2. Compute the break-even quantity of each product.
3. Prepare an income statement for Texas-Q for the coming year. What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break-even sales revenue. Enter the contribution margin ratio as a percentage rounded to two decimal places; round the break-even sales revenue to the nearest dollar.
4. Compute the margin of safety for the coming year.
Solutions
Expert Solution
1. Sales mix = 4:10:1
| Portable grills | Stationary grills | Smokers | |
| Sales units | 18400 | 46000 | 4600 |
| Divide by 200 | 92 | 230 | 23 |
| Divide by 23 | 4 | 10 | 1 |
2.
| Sales mix | Sales price per unit | Total per composite unit | ||
| Portable grills | 4 | $92 | $368 | |
| Stationary grills | 10 | $201 | $2,010 | |
| Smokers | 1 | $252 | $252 | |
| $2,630 | ||||
| Sales mix | Variable cost per unit | Total per composite unit | ||
| Portable grills | 4 | $45 | $180 | |
| Stationary grills | 10 | $135 | $1,350 | |
| Smokers | 1 | $144 | $144 | |
| $1,674 |
| Contribution margin per composite unit | ||
| Sales price | $2,630 | |
| Less: Variable cost | $1,674 | |
| Contribution margin | $ 956 | |
| Total fixed costs | / | Contribution margin per unit | = | Break-Even Units | |
| $2,064,960 | / | $956 | = | 2160 | composite units |
| Number per composite unit | Number of composite units to break even | Break-even quantity | ||
| Portable grills | 4 | 2160 | 8640 | units |
| Stationary grills | 10 | 2160 | 21600 | units |
| Smokers | 1 | 2160 | 2160 | units |
3.
| Texas-Q Company | |
| Income Statement | |
| Sales | 12098000 |
| Variable costs | 7700400 |
| Contribution margin | 4397600 |
| Fixed costs | 2064960 |
| Net income $ | 2332640 |
Overall contribution margin ratio = $4397600/$12098000 = 36.35%
Overall break-even sales revenue = $2064960/36.35% = $5680770
4. Margin of safety = Sales - Break-even sales = $12098000 - $5680770 = $6417230
ekkarill92 answered 1 year agoRelated Solutions
Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill,...
Texas-Q Company produces and sells barbeque grills. Texas-Q
sells three models: a small portable gas grill, a larger stationary
gas grill, and the specialty smoker. In the coming year, Texas-Q
expects to sell 21,200 portable grills, 58,300 stationary grills,
and 5,300 smokers. Information on the three models is as
follows:
Portable
Stationary
Smokers
Price
$95
$201
$249
Variable cost
Per unit
50
129
139
Total fixed cost is $2,358,760.
Required:
1. What is the sales mix of portable grills to...
Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill,...
Texas-Q Company produces and sells barbeque grills. Texas-Q
sells three models: a small portable gas grill, a larger stationary
gas grill, and the specialty smoker. In the coming year, Texas-Q
expects to sell 19,200 portable grills, 52,800 stationary grills,
and 4,800 smokers. Information on the three models is as
follows:
Portable
Stationary
Smokers
Price
$87
$198
$252
Variable cost
per unit
43
133
145
Total fixed cost is $2,145,700.
Required:
1.
What is the sales mix of
portable grills to...
Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill,...
Texas-Q Company produces and sells barbeque grills. Texas-Q
sells three models: a small portable gas grill, a larger stationary
gas grill, and the specialty smoker. In the coming year, Texas-Q
expects to sell 16,200 portable grills, 59,400 stationary grills,
and 5,400 smokers. Information on the three models is as
follows:
Portable
Stationary
Smokers
Price
$89
$195
$253
Variable cost
per unit
45
131
140
Total fixed cost is $2,078,310.
Required:
1.
What is the sales mix of
portable grills to...
Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill,...
Texas-Q Company produces and sells barbeque grills. Texas-Q
sells three models: a small portable gas grill, a larger stationary
gas grill, and the specialty smoker. In the coming year, Texas-Q
expects to sell 19,200 portable grills, 43,200 stationary grills,
and 4,800 smokers. Information on the three models is as
follows:
Portable
Stationary
Smokers
Price
$92
$205
$251
Variable cost
per unit
44
127
138
Total fixed cost is $2,175,120.
Required:
1.
What is the sales mix of portable grills to...
Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill,...
Texas-Q Company produces and sells barbeque grills. Texas-Q
sells three models: a small portable gas grill, a larger stationary
gas grill, and the specialty smoker. In the coming year, Texas-Q
expects to sell 13,800 portable grills, 50,600 stationary grills,
and 4,600 smokers. Information on the three models is as
follows:
Portable
Stationary
Smokers
Price
$89
$204
$253
Variable cost
per unit
50
134
143
Total fixed cost is $2,163,490.
Required:
1.
What is the sales mix of portable grills to...
Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill,...
Texas-Q Company produces and sells barbeque grills. Texas-Q
sells three models: a small portable gas grill, a larger stationary
gas grill, and the specialty smoker. In the coming year, Texas-Q
expects to sell 15,900 portable grills, 53,000 stationary grills,
and 5,300 smokers. Information on the three models is as
follows:
Portable
Stationary
Smokers
Price
$92
$201
$251
Variable cost
per unit
43
132
137
Total fixed cost is $2,016,120.
Required:
1.
What is the sales mix of portable grills to...
Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill,...
Texas-Q Company produces and sells barbeque grills. Texas-Q
sells three models: a small portable gas grill, a larger stationary
gas grill, and the specialty smoker. In the coming year, Texas-Q
expects to sell 15,300 portable grills, 45,900 stationary grills,
and 5,100 smokers. Information on the three models is as
follows:
Portable
Stationary
Smokers
Price
$86
$205
$245
Variable cost
per unit
40
133
143
Total fixed cost is $1,873,680.
Required:
1.
What is the sales mix of portable grills to...
Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill,...
Texas-Q Company produces and sells barbeque grills. Texas-Q
sells three models: a small portable gas grill, a larger stationary
gas grill, and the specialty smoker. In the coming year, Texas-Q
expects to sell 15,000 portable grills, 45,000 stationary grills,
and 5,000 smokers. Information on the three models is as follows:
Portable Stationary Smokers Price $89 $196 $255 Variable cost per
unit 45 126 141 Total fixed cost is $1,918,440. Required: 1. What
is the sales mix of portable grills to...
Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill,...
Texas-Q Company produces and sells barbeque grills. Texas-Q
sells three models: a small portable gas grill, a larger stationary
gas grill, and the specialty smoker. In the coming year, Texas-Q
expects to sell 15,900 portable grills, 47,700 stationary grills,
and 5,300 smokers. Information on the three models is as
follows:
Portable
Stationary
Smokers
Price
$86
$201
$254
Variable cost
per unit
44
135
136
Total fixed cost is $1,835,220.
Required:
1.
What is the sales mix of portable grills to...
Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill,...
Texas-Q Company produces and sells barbeque grills. Texas-Q
sells three models: a small portable gas grill, a larger stationary
gas grill, and the specialty smoker. In the coming year, Texas-Q
expects to sell 14,700 portable grills, 53,900 stationary grills,
and 4,900 smokers. Information on the three models is as
follows:
Portable
Stationary
Smokers
Price
$94
$199
$250
Variable cost
per unit
43
135
142
Total fixed cost is $2,026,500.
Required:
1.
What is the sales mix of
portable grills to...
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