Mario Company sells two different game consoles--a Premium console and a Standar

Question

Mario Company sells two different game consoles--a Premium console and a Standard console. The Premium console sells for $175 and has variable costs of $125. The Standard console sells for $100 and has variable costs of $25. Total fixed costs are $105,750.

A: Mario sells one premium console for every THREE standard consoles sold. What is the breakeven point in total units?
B: How many units of PREMIUM will be sold at the breakeven point?
C: How many units of STANDARD will be sold at the breakeven point?
D: Prepare a net variable costing income statement reflecting an 8% decrease in unit sales. What was the dollar amount of change in the net income? Type the answer as a positive number.

Explanation / Answer

Premium Standard Total Selling price per unit 175 100 Variable cost per unit 125 25 Contribution margin per unit 50 75 Sales mix (1:3) 0.25 0.75 Weighted Contribution per unit 12.5 56.25 68.75 Break even point: Total fixed cost / Weighted Contribution per unit 105750 /68.75 = 1538 units Number of Units of Premium sold: 1538* 0.25 = 385 units Number of Units of Standard sold: 1538*0.75 = 1153 units Variable cost Income Statement: Premium Standard Total Units sold 354 1061 Sales revenue: Premium (354 units @ 175) 61950 Standard (1061*100) 106100 Total sales revenue 168050 Less: Variable Premium (354*125) 44250 Standard (1061*25) 26525 Total variable cost 70775 Contribution margin 17700 79575 97275 Less: Fixed cost 105750 Net loss -8475 Decrease in Income by ($8475)

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