CVP Analysis of Multiple Products Alo Company produces commercial printers. One is the regular model, a basic model that is designed to copy and print in black and white. Another model, the deluxe model, is a color printer-scanner-copier. For the coming year, Alo expects to sell 100,000 regular models and 20,000 deluxe models. A segmented income statement for the two products is as follows: Regular Model Deluxe Model Total Sales $15,000,000 $13,400,000 $28,400,000 Less: Variable costs 9,000,000 8,040,000 17,040,000 Contribution margin $6,000,000 $5,360,000 $11,360,000 Less: Direct fixed costs 1,200,000 960,000 2,160,000 Segment margin $4,800,000 $4,400,000 $9,200,000 Less: Common fixed costs 1,588,800 Operating income $7,611,200 Required: 1. Compute the number of regular models and deluxe models that must be sold to break even. Round your answers to the nearest whole unit. Regular models fill in the blank 1 units Deluxe models fill in the blank 2 units 2. Using information only from the total column of the income statement, compute the sales revenue that must be generated for the company to break even. Round the contribution margin ratio to four decimal places. Use the rounded value in the subsequent computation. (Express as a decimal-based amount rather than a whole percentage.) Round the amount of revenue to the nearest dollar. Contribution margin ratio fill in the blank 3 Revenue $fill in the blank 4

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 40E

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CVP Analysis of Multiple Products

Alo Company produces commercial printers. One is the regular model, a basic model that is designed to copy and print in black and white. Another model, the deluxe model, is a color printer-scanner-copier. For the coming year, Alo expects to sell 100,000 regular models and 20,000 deluxe models. A segmented income statement for the two products is as follows:

	Regular Model	Deluxe Model	Total
Sales	$15,000,000	$13,400,000	$28,400,000
Less: Variable costs	9,000,000	8,040,000	17,040,000
Contribution margin	$6,000,000	$5,360,000	$11,360,000
Less: Direct fixed costs	1,200,000	960,000	2,160,000
Segment margin	$4,800,000	$4,400,000	$9,200,000
Less: Common fixed costs			1,588,800
Operating income			$7,611,200

Required:

1. Compute the number of regular models and deluxe models that must be sold to break even. Round your answers to the nearest whole unit.

Regular models	fill in the blank 1 units
Deluxe models	fill in the blank 2 units

2. Using information only from the total column of the income statement, compute the sales revenue that must be generated for the company to break even. Round the contribution margin ratio to four decimal places. Use the rounded value in the subsequent computation. (Express as a decimal-based amount rather than a whole percentage.) Round the amount of revenue to the nearest dollar.

Contribution margin ratio	fill in the blank 3
Revenue	$fill in the blank 4

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