Most businesses sell several products at varying prices. The products often have different unit variable costs. Thus, the total profit and he breakeven point depend on the proportions in which the products are sold. Sales mix is the relative contribution of sales among arious products sold by a firm. Assume that the sales of Jordan Incorporated for a typical year are as follows: A Product Units Sold Sales Mix 18,064 80% 20 100% B Total 4,516 22,580 Assume the following unit selling prices and unit variable costs: Product A B Selling Price $ 82 142 Variable Cost $ 67 Contribution Margin $ 15 102 40 Fixed costs are $404,000 per year. Assume that the sales mix, expressed in terms of relative physical units sold, is constant as sales olume changes. Required: Determine the breakeven point in total units and, for this breakeven point, calculate the number of units of A and B that must be cold. Use the weighted-average contribution margin approach. . Determine the overall breakeven point in terms of sales dollars based on the weighted-average contribution margin ratio (CMR). Hint: The weights for calculating the weighted-average CMR are based on relative sales dollars, not units, of the two products.) Break down the total sales dollars breakeven point into sales dollars for product A and sales dollars for product B. 5. Assume the original facts except that now fixed costs are expected to be $40,400 higher than originally planned. How does this expected Increase in fixed costs affect the breakeven point in units? How does the percentage change in the breakeven point compare to the percentage Increase in fixed costs? Complete this question by entering your answers in the tabs below. Required 1 Required 3 Required 5 Determine the breakeven point in total units and, for this breakeven point, calculate the number of units of A and B that must be sold. Use the weighted-average contribution margin approach. (Round your answer up to the nearest whole number.) Overall break-even point in units units Breakeven sales in units for Product A units

Most businesses sell several products at varying prices. The products often have different unit variable costs. Thus, the total profit and he breakeven point depend on the proportions in which the products are sold. Sales mix is the relative contribution of sales among arious products sold by a firm. Assume that the sales of Jordan Incorporated for a typical year are as follows: A Product Units Sold Sales Mix 18,064 80% 20 100% B Total 4,516 22,580 Assume the following unit selling prices and unit variable costs: Product A B Selling Price $ 82 142 Variable Cost $ 67 Contribution Margin $ 15 102 40 Fixed costs are $404,000 per year. Assume that the sales mix, expressed in terms of relative physical units sold, is constant as sales olume changes. Required: Determine the breakeven point in total units and, for this breakeven point, calculate the number of units of A and B that must be cold. Use the weighted-average contribution margin approach. . Determine the overall breakeven point in terms of sales dollars based on the weighted-average contribution margin ratio (CMR). Hint: The weights for calculating the weighted-average CMR are based on relative sales dollars, not units, of the two products.) Break down the total sales dollars breakeven point into sales dollars for product A and sales dollars for product B. 5. Assume the original facts except that now fixed costs are expected to be $40,400 higher than originally planned. How does this expected Increase in fixed costs affect the breakeven point in units? How does the percentage change in the breakeven point compare to the percentage Increase in fixed costs? Complete this question by entering your answers in the tabs below. Required 1 Required 3 Required 5 Determine the breakeven point in total units and, for this breakeven point, calculate the number of units of A and B that must be sold. Use the weighted-average contribution margin approach. (Round your answer up to the nearest whole number.) Overall break-even point in units units Breakeven sales in units for Product A units

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter10: Forecasting Financial Statement

Section: Chapter Questions

Problem 12PC

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