FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Morris Industries manufactures and sells three products (AA, BB, and CC). The sales
price and unit variable cost for the three products are as follows:
Sales Price Variable Cost
Product per Unit
per Unit
$30
AA
$50
BB
35
10
CC
25
15
Their sales mix is reflected as a ratio of 5:3:2. Annual fixed costs shared by the three
products are $253,500 per year.
A. What are total variable costs for Morris with their current product mix?
Total variable costs $
B. Calculate the number of units of each product that will need to be sold in order for
Morris to break even.
Number of
Units per Product
AA
BB
C. What is their break-even point in sales dollars?
Break-even point in sales $
D. Using an income statement format, prove that this is the break-even point. If an
amount is zero, enter "0".
Income Statement
Sales
Product AA
Product BB
Product CC
Total Sales
Variable Costs
Product AA
Product BB
Product CC
Total Variable Costs $
Contribution Margin
Fixed Costs
Net Income
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Transcribed Image Text:Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and unit variable cost for the three products are as follows: Sales Price Variable Cost Product per Unit per Unit $30 AA $50 BB 35 10 CC 25 15 Their sales mix is reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $253,500 per year. A. What are total variable costs for Morris with their current product mix? Total variable costs $ B. Calculate the number of units of each product that will need to be sold in order for Morris to break even. Number of Units per Product AA BB C. What is their break-even point in sales dollars? Break-even point in sales $ D. Using an income statement format, prove that this is the break-even point. If an amount is zero, enter "0". Income Statement Sales Product AA Product BB Product CC Total Sales Variable Costs Product AA Product BB Product CC Total Variable Costs $ Contribution Margin Fixed Costs Net Income
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