1. Silver Company sells Products S and T and has made the following estimates fo
ID: 2380090 • Letter: 1
Question
1. Silver Company sells Products S and T and has made the following estimates for the coming year:
Product
Unit Selling Price
Unit Variable Cost
Sale Mix
S
$30
$24
60%
T
$70
$56
40%
Fixed cost estimated at $202,400. Determine
(a)the estimated sales in units of the overall product necessary to reach the break-even point for the coming year
(b)the estimated number of units of each product necessary to be sold to reach the break point for the coming year
(c)the estimated sales in units of the overall product necessary to realize an operating income of $119,600 for the coming year.
Product
Unit Selling Price
Unit Variable Cost
Sale Mix
S
$30
$24
60%
T
$70
$56
40%
Silver Company sells Products S and T and has made the following estimates for the coming year: Fixed cost estimated at $202,400. Determine the estimated sales in units of the overall product necessary to reach the break-even point for the coming year the estimated number of units of each product necessary to be sold to reach the break point for the coming year the estimated sales in units of the overall product necessary to realize an operating income of $119,600 for the coming year.Explanation / Answer
Step 1: Calculate the contribution margin per unit for each product:
Cont pu of S = SP pu - VC pu = 30-24 = $6 pu
Cont pu of T = 70-56= 14 pu
Step 2: Calculate the weighted-average contribution margin per unit for the sales mix using the following formula:
S CM per Unit
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.