Wedding Productions provides wedding packages for discerning couples marrying on

Question

Wedding Productions provides wedding packages for discerning couples marrying on the beach at Gulf Shores, Alabama. The company's fixed costs are $48,000. The company has two wedding service packages that are all inclusive, the standard package and the deluxe package. Product Selling price per service Standard $2,000 Deluxe $4,000 Variable cost per service Standard $1,200 Deluxe $2,200 The company expects the sales mix to continue to be 60% standard wedding packages and 40% deluxe wedding packages. Required: Compute the following. Break even sales in units of each package. Break even sales in total dollars. Unit sales of each package required to earn operating income of $72,000. Total sales dollars required to earn operating income of $72,000. Contribution margin per unit of each package Weighted average contribution margin per unit Suppose the owner thinks an improvement in the economy will allow the company to sell more deluxe wedding packages this year, changing the sales mix to 40percentage /60 percentage. Compute the following using this new scenario. Break even sales in units of each package. Break even sales in total dollars. Unit sales of each package required to earn operating income of $72,000. Total sales dollars required to earn operating income of $72,000. Contribution margin per unit of each package Weighted average contribution margin per unit Prepare a set of comparative income statements to prove your results.

Explanation / Answer

Let total no of units be 5x Statement showing computations Particulars Standard Deluxe Selling Price per Service                        2,000.00                        4,000.00 Variable Cost per Service                        1,200.00                        2,200.00 e) Contribution per service                            800.00                        1,800.00 Salex Mix 60% 40% Or Sales Mix 3x 2x At break even Fixed Costs = Contribution 48,000 = 3x*800 + 2x*1,800 48,000 = 2400x + 3600x 48000 = 6000x x= 8 a) Break even Sales in Units                              24.00                              16.00 b) Break even Sales in $                      48,000.00                      64,000.00 At Income of 72,000 Fixed Costs = Contribution 120,000 = 3x*800 + 2x*1,800 120,000 = 2400x + 3600x 120,000 = 6,000x x= 20 c) Break even Sales in Units                              60.00                              40.00 d) Break even Sales in $                    120,000.00                    160,000.00 f) Weighted Avg cont pu= (800*3 + 1800*2)/5 = 1200 Statement showing computations Particulars Standard Deluxe Selling Price per Service                        2,000.00                        4,000.00 Variable Cost per Service                        1,200.00                        2,200.00 k) Contribution per service                            800.00                        1,800.00 Salex Mix 40% 60% Or Sales Mix 2x 3x At break even Fixed Costs = Contribution 48,000 = 2x*800 + 3x*1,800 48,000 = 1600x + 5400x 48000 = 7000x x= 6.86 g) Break even Sales in Units                              13.72                              20.58 h) Break even Sales in $                      27,440.00                      82,320.00 At Income of 72,000 Fixed Costs = Contribution 120,000 = 2x*800 + 3x*1,800 120,000 = 1600x + 5400x 120,000 = 7000x x= 17.14 i) Break even Sales in Units                              34.28                              51.42 j) Break even Sales in $                      68,560.00                    205,680.00 l) Weighted Avg cont pu= (800*2 + 1800*3)/5 = 1400

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