Water World sells three products: ski vests, slalom skis, and ski ropes. Informa

Question

Water World sells three products: ski vests, slalom skis, and ski ropes. Information related to each product line is provided below: Ski Vests Slalom Skis Ski Ropes Unit selling price $ 120 $ 300 $ 50 Unit variable cost 60 210 10 Sales mix percentage 20 % 70 % 10 % The company's annual fixed costs are approximately $741,000. a. Compute total annual sales that the company must generate to break even. (Omit the "$" sign in your response.) Total annual sales $ b. Compute total annual sales that the company must generate to earn operating income of $234,000. (Omit the "$" sign in your response.) Total annual sales $

Explanation / Answer

Ski Vests Slalom Skis Ski Ropes Unit selling price $ 120 $ 300 $ 50 Unit variable cost 60 210 10 Sales mix percentage 20 % 70 % 10 % contribution margin= 60 90 40 wighted average contibution margin = (60*0.2+ 90*0.7 +40*0.1) =83 per unit Break-even Point in Units of Sales Mix = Total Fixed Cost ÷ Weighted Average CM per Unit Break-even Point in Units of Sales Mix =$741,000/83 = 8928 units. thank you please rate lifesaver

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