Question 4 Mega Electronix sells television sets and DVD players.The business is
ID: 2343467 • Letter: Q
Question
Question 4
Mega Electronix sells television sets and DVD players.The business is divided into two divisions along product lines. CVP income statements for a recent quarter's activity are presented below.
TV Division DVD Division Total
Sales $882,000 $518,000 $1,400,000
Variable costs 626,220
305,620
931,840
Contribution margin $255,780
$212,380
468,160
Fixed costs 136,940
Net income $331,220
Incorrect.
Determine sales mix percentage and contribution margin ratio for each division. (Round answers to 2 decimal places, e.g. 10.50.)
Sales Mix PercentageTV Division
DVD Division
Contribution margin ratioTV Division
DVD Division
Incorrect.
Calculate the company's weighted-average contribution margin ratio. (Round answers to 3 decimal places, e.g. 2.250.)
Incorrect.
Calculate the company's break-even point in dollars.
$
Incorrect.
Determine the sales level in dollars for each division at the break-even point.
TV Division $
DVD Division $
Explanation / Answer
Determine sales mix percentage and contribution margin ratio for each division. (Round answers to 2 decimal places, e.g. 10.50.) Sales Mix PercentageTV Division: 882,000/1,400,000 = 0.63 or 63% DVD Division: 518,000/1,400,000 = 0.37 or 37% Contribution margin ratioTV Division: (882,000 – 626,200)/882,000 = 0.29 or 29% DVD Division: (518,000 – 305,620)/518,000 = 0.41 or 41% Calculate the company's weighted-average contribution margin ratio. (Round answers to 3 decimal places, e.g. 2.250.) .0.63*0.29 + 0.37*0.41 = 0.334 or 33.4% Calculate the company's break-even point in dollars. Fixed costs 136,940/0.334 = 410,000 Determine the sales level in dollars for each division at the break-even point. TV Division $ 410,000*0.63 = 258,300 DVD Division $ 410,000*0.37 = 151,700
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