Question

Question:
JB Company sells three products — A, B, and C — with contribution margins of $2.5, $1, and $2, respectively. The fixed costs for the period are $128. Preliminarily, the company has three versions of forecast for the coming period as follows:

Forecast One:

The forecast sales of 200 units in the coming period, consisting of 40 units of A, 100 units of B, and 60 units of C.

Forecast Two:

The forecast sales of 220 units in the coming period, maintaining the same sales mix as Forecast One.

Forecast Three:

The forecast sales of 240 units in the coming period, consisting of 40 units of A, 100 units of B, and 100 units of C. Fixed costs are increased to $160.

Required:

A. What is the company’s breakeven point in bundles under Forecast One?
Breakeven point =  bundles            

B. What is the company’s breakeven point in total units of (in the sum of) the three products under Forecast One?
Breakeven point =  in total units

C. What is the company’s total contribution margin under Forecast Two?
Contribution Margin = $                         

D. What is the company’s operating income under Forecast Three?
Operating Income = $                                  

E. What is the new breakeven point in bundles under Forecast Three?
Breakeven point =  bundles

F. What is the new breakeven point in total units of (in the sum of) the three products under Forecast Three?
Breakeven point =  in total units    

Answer 1

Particulars	A			B			C			Total
	Units	Contribution per Unit	Total Contribution	Units	Contribution per Unit	Total Contribution	Units	Contribution per Unit	Total Contribution	Units	Total Contribution
Contribution Margin per unit		2.5			1			2
Forcast A	40	2.5	100	100	1	100	60	2	120	200	320
Forcast B	44	2.5	110	110	1	110	66	2	132	220	352
Forcast C	40	2.5	100	100	1	100	100	2	200	240	400
Requirements
A. What is the company’s breakeven point in bundles under Forecast One?
Breakeven point =  bundles
Break Even Point Factor = Fixed Cost / Margin = 128/320 =					0.4
	Units	Contribution per Unit	Total Contribution	Units	Contribution per Unit	Total Contribution	Units	Contribution per Unit	Total Contribution	Units	Total Contribution
Forcast A	40	2.5	100	100	1	100	60	2	120	200	320
Break Even Units = original Units * Breakeven Point Factor	16	2.5	40	40	1	40	24	2	48	80	128
B. What is the company’s breakeven point in total units of (in the sum of) the three products under Forecast One?
Breakeven point =  in total units
Break Even Point Factor = Fixed Cost / Margin = 128/320 =					0.4
	Units	Contribution per Unit	Total Contribution	Units	Contribution per Unit	Total Contribution	Units	Contribution per Unit	Total Contribution	Units	Total Contribution
Forcast A	40	2.5	100	100	1	100	60	2	120	200	320
Break Even Units = original Units * Breakeven Point Factor	16	2.5	40	40	1	40	24	2	48	80	128
C. What is the company’s total contribution margin under Forecast Two?
Contribution Margin = $
Forcast B Units	44	2.5	110	110	1	110	66	2	132	220	352
Total Contribution Margin per Unit = 352/220 =			1.6	per unit
Forcast B Units = (Units of A in Forcast A/Total Units of Forcast A) * 220
D. What is the company’s operating income under Forecast Three?
Operating Income = $
Forcast C	40	2.5	100	100	1	100	100	2	200	240	400
Total Contribution =	400
Fixed Costs =	128
Operating Income =	272
E. What is the new breakeven point in bundles under Forecast Three?
Breakeven point =  bundles
Break Even Point Factor = Fixed Cost / Margin = 128/400 =					0.32
	Units	Contribution per Unit	Total Contribution	Units	Contribution per Unit	Total Contribution	Units	Contribution per Unit	Total Contribution	Units	Total Contribution
Forcast C	40	2.5	100	100	1	100	100	2	200	240	400
Break Even Units = original Units * Breakeven Point Factor	13	2.5	32	32	1	32	32	2	64	77	128
F. What is the new breakeven point in total units of (in the sum of) the three products under Forecast Three?
Breakeven point =  in total units
Breakeven point =  bundles
Break Even Point Factor = Fixed Cost / Margin = 128/400 =					0.32
	Units	Contribution per Unit	Total Contribution	Units	Contribution per Unit	Total Contribution	Units	Contribution per Unit	Total Contribution	Units	Total Contribution
Forcast C	40	2.5	100	100	1	100	100	2	200	240	400
Break Even Units = original Units * Breakeven Point Factor	13	2.5	32	32	1	32	32	2	64	77	128