Malibu Corporation has monthly fixed costs of $57000. It sells two products for
ID: 2339662 • Letter: M
Question
Malibu Corporation has monthly fixed costs of $57000. It sells two products for which it has provided the following information Contribution Margin $9 Sales Price Product 1 Product 2 $15 20 a. What total monthly sales revenue is required to break even if the relative sales mix is 30 percent for Product 1 and 70 percent for Product 2? (Round your answer to the nearest dollar amount.) b. What total monthly sales revenue is required to earn a monthly operating income of $16,000 if the relative sales mix is 20 percent for Product 1 and 80 percent for Product 2? (Round your answer to the nearest dollar amount.) a. Break even sales revenue b. Target sales revenueExplanation / Answer
Answer
---Working
Working
Product 1
Product 2
A
Sales price
$ 15.00
$ 20.00
B
Contribution margin
$ 9.00
$ 4.00
C = A/B
CM ratio
0.60
0.20
D
Sales Mix
30%
70%
E = C x D
Weighted CM Ratio
18%
14%
--Answer calculation
A
Total Fixed Cost
$ 57,000.00
B = 18% + 14%
Total Weighted CM Ratio
32.0%
C = A/B
Break Even Sales revenue
$ 178,125.00 = ANSWER
---Working
Working
Product 1
Product 2
A
Sales price
$ 15.00
$ 20.00
B
Contribution margin
$ 9.00
$ 4.00
C = A/B
CM ratio
0.60
0.20
D
Sales Mix
20%
80%
E = C x D
Weighted CM Ratio
12%
16%
---Answer calculation
A
Total Fixed Cost
$ 57,000.00
B
Total Target Monthly Operating Income
$ 16,000.00
C = A+B
Total Contribution margin required
$ 73,000.00
D = 12% + 16%
Total Weighted CM Ratio
28.0%
E = C/D
Break Even Sales revenue
$ 203,571 = Answer
Working
Product 1
Product 2
A
Sales price
$ 15.00
$ 20.00
B
Contribution margin
$ 9.00
$ 4.00
C = A/B
CM ratio
0.60
0.20
D
Sales Mix
30%
70%
E = C x D
Weighted CM Ratio
18%
14%
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