Q1. (Warren) Silver River Company sells Products S and T and has madethe following estimates for the coming year.ProductUnit Selling Price Unit Variable CostS$3$1215Sales Mix30%70%T4Fixed costs are estimated at $46,800.Instructions, Determine1. the estimated number of units of each product necessary to be sold toreach the break-even point for the coming year by using mathematicalapproach2. the estimated number of units of each product necessary to be sold toreach the break-even point for the coming year by using weighted averagecontribution margin approach

Solution Introduction Breakeven point is that point at which the contribution generated is equal to…

Q1. (Warren) Silver River Company sells Products S and T and has made the following estimates for the coming year. Product Unit Selling Price Unit Variable Cost $3 S $12 Sales Mix 30% 70% T 15 Fixed costs are estimated at $46.800.

Q1. (Warren) Silver River Company sells Products S and T and has made the following estimates for the coming year. Product Unit Selling Price Unit Variable Cost $3 S $12 Sales Mix 30% 70% T 15 Fixed costs are estimated at $46.800.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 6CE

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Sales Needed to Earn Target Income Chillmax Company plans to sell 3,500 pairs of shoes at 60 each in the coming year. Variable cost is 35% of the sales price; contribution margin is 65% of the sales price. Total fixed cost equals 78,000 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the sales revenue that Chillmax must make to earn operating income of 81,900 by using the point in sales equation. 2. Check your answer by preparing a contribution margin income statement based on the sales dollars calculated in Requirement 1.
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Exxarro Llimited is considering pricing and costing for the year ahead. The following data based on expected production and sales of 15 000 units are provided for analysis:Variable manufacturing costR1 185 000Fixed manufacturing costR510 000Sales commissionR5 per unit soldFixed administration costR130 000SalesR210 per unit Study the information provided above and answer the following questions independently:4.1 Calculate the break-even sales value. 4.2 Calculate the sales volume required to achieve a profit of R 800 000. 4.3 Suppose Exxaro Limited is considering a decrease of 10% per unit in the selling price of the product with the expectation that it would increase sales volume by 10%. Is this a good idea? Motivate your answer with relevant calculations.
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