cumently has three difflerent throughout the world. EZ Camy Carty Corp is the ma
ID: 2431454 • Letter: C
Question
cumently has three difflerent throughout the world. EZ Camy Carty Corp is the maker of high quality poif bags The company Ines of bags which t sells to sporting goods stores and golf shops sells a constant mix of 4 arge-sized bag. Total Sxed costs for the year are expected to be decimais small bags for each medium-sized bag and 5 medium bags for each $2.027 562 (Note: round al to three places: round final answers up to nearest whole number) Selling price per bag 51 $160 Variabie cos perbg The breakeven point in units (for the year) would be A 32400 small: 8,100 medium and 1,620 large B. 34,808 smait 8,702 medium and 1,740 large C 37.010 small; 9250 medium; and 1,850 large. D. 38.505 small; 9,625 medium; and 1,925 large 12 A cost is not relevant for decision making if it A Does not differ for each option available to the decision maker. B. Changes from period to period C. Is a future cost D. Is a mixed cost E. Is a fixed costExplanation / Answer
Solution:
Sales mix between small, medium and large = 20:5:1
Fixed costs = $2,027,562
Breakeven Sales units = Fixed costs/ Weighted average contribution margin per unit
= $2,027,562 / $44.808 = 45250 units
Breakeven point - small bags = 45250 *20/26 = 34808 bags
Breakeven point - medium bags = 45250 *5/26 = 8702 bags
Breakeven point - Large bags = 45250 *1/26 = 1740 bags
Hence option B is correct.
Solution 12:
A cost is not relevant for decision making if it does not differ for each option available to the decision maker.
Hence option A is correct.
Computation of weighted average contribution margin per unit - EZ Carry Particualrs Small Medium Large Total Selling price per unit $100.00 $150.00 $250.00 Variable cost per unit $60.00 $95.00 $160.00 Contribution margin per unit $40.00 $55.00 $90.00 Sales Mix 20/26 5/26 1/26 Weighted average contribution per unit $30.769 $10.577 $3.462 $44.808Related Questions
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