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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Most businesses sell several products at varying prices. The products often have different unit variable costs. Thus, the total profit and
the breakeven point depend on the proportions in which the products are sold. Sales mix is the relative contribution of sales among
various products sold by a firm. Assume that the sales of Jordan Incorporated for a typical year are as follows:
Product Units Sold
Sales Mix
A
B
Total
18,064
4,516
22,580
80%
20
100%
Assume the following unit selling prices and unit variable costs:
Product
A
Selling Price
$ 82
B
142
Variable Cost
$ 67
102
Contribution
Margin
$ 15
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
volume changes.
Required:
1. 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.
3. 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
Breakeven sales in units for Product A
units
units
Breakeven sales in units for Product B
units
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 6 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education