Question

In: Accounting

1. NoFly Corporation sells three different models of a mosquito “zapper.” Model A12 sells for $53...

1. NoFly Corporation sells three different models of a mosquito “zapper.” Model A12 sells for $53 and has variable costs of $44. Model B22 sells for $106 and has variable costs of $72. Model C124 sells for $408 and has variable costs of $308. The sales mix of the three models is A12, 57%; B22, 28%; and C124, 15%.

What is the weighted-average unit contribution margin? (Round answer to 2 decimal places, e.g. 15.50.)

Weighted-Average Unit Contribution Margin $-------

2. NoFly Corporation sells three different models of a mosquito “zapper.” Model A12 sells for $55 and has variable costs of $43. Model B22 sells for $110 and has variable costs of $72. Model C124 sells for $416 and has variable costs of $321. The sales mix of the three models is A12, 60%; B22, 30%; and C124, 10%.

If the company has fixed costs of $193,890, how many units of each model must the company sell in order to break even? (Round Per unit values to 2 decimal palces, e.g. 15.25 and final answers to 0 decimal places, e.g. 5,275.)
Model

A12-------

B22-------

C124--------

Total break-even---------- units

Solutions

Expert Solution

Answer :

1) contribution margin per unit = selling price per unit - variable cost per unit

Particularls contribution margin Ratio weighted average unit contribution margin
Model A12 9 (53 -44) 0.57 5.13
Model B22 34 (106 - 72) 0.28 9.52
Model C124 100 (408 - 308) 0.15 15

Total weighted average unit contribution margin unit = 5.13 + 9.52 + 15

= $29.65

Answer :

2) calculation of break even in units :

contribution margin per unit = selling price per unit - variable cost per unit

Particularls contribution margin Ratio weighted average unit contribution margin
Model A12 12 (55 -43) 0.6 7.2
Model B22 38 (110 - 72) 0.3 11.4
Model C124 95 (416 - 321) 0.1 9.5

Total weighted average unit contribution margin unit = 7.2 + 11.4 + 9.5

= $28.1

Break even point in units (fixed cost ÷ contribution margin)

(1,93,890 ÷ 28.1)

6,900
Model A12 4140
Model B22 2070
Model C124 690

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