PLEASE SHOW WORK! THANK YOU. Sales mix, three products. The Janowski Company has
ID: 2446681 • Letter: P
Question
PLEASE SHOW WORK! THANK YOU.
Sales mix, three products.
The Janowski Company has three product lines of mugs-A, B and C- with contirbution margins of $5, $4 and $3, respectively. the president foresees sales of 168,000 units in the coming period, consisting of 24,000 units of A, 96,000 units of B, and 48,000 units of C. The company's fixed costs for the period are 4405,000.
1. What is the company's breakeven point in units, assuming that the given sales mix is maintained?
2. If the sales mix is maintained, what is the total contirbution margin when 168,000 units are sold? What is the operating income?
3. What would operating income beif the company sold 24,000 units of A, 48,000 units of B, and 96,000 units of C? What is the new breakeven point in units if these relationships persist in the next period?
4. Comparing the breakeven points in requirements 1 and 3, is it always better for a company to choose the sales mix that yields the lower breakeven point? Explain.
Explanation / Answer
The Janowski Company has three product lines of mugs-A, B and C- with contirbution margins of $5, $4 and $3, respectively. the president foresees sales of 168,000 units in the coming period, consisting of 24,000 units of A, 96,000 units of B, and 48,000 units of C. The company's fixed costs for the period are 4405,000.
1. What is the company's breakeven point in units, assuming that the given sales mix is maintained?
2. If the sales mix is maintained, what is the total contirbution margin when 168,000 units are sold? What is the operating income?
3. What would operating income beif the company sold 24,000 units of A, 48,000 units of B, and 96,000 units of C? What is the new breakeven point in units if these relationships persist in the next period?
4. Comparing the breakeven points in requirements 1 and 3, is it always better for a company to choose the sales mix that yields the lower breakeven point? Explain.
Contribution Margin per Unit
Total contribution Margin
Sales mix x contribution margin per unit
Contribution Margin per Unit
Total contribution Margin
The Janowski Company has three product lines of mugs-A, B and C- with contirbution margins of $5, $4 and $3, respectively. the president foresees sales of 168,000 units in the coming period, consisting of 24,000 units of A, 96,000 units of B, and 48,000 units of C. The company's fixed costs for the period are 4405,000.
1. What is the company's breakeven point in units, assuming that the given sales mix is maintained?
2. If the sales mix is maintained, what is the total contirbution margin when 168,000 units are sold? What is the operating income?
3. What would operating income beif the company sold 24,000 units of A, 48,000 units of B, and 96,000 units of C? What is the new breakeven point in units if these relationships persist in the next period?
4. Comparing the breakeven points in requirements 1 and 3, is it always better for a company to choose the sales mix that yields the lower breakeven point? Explain.
1) ProductContribution Margin per Unit
Volume Sales MixTotal contribution Margin
Sales mix x contribution margin per unit
A $5 24,000 14.29% $120,000 $0.71 B $4 96,000 57.14% $384,000 $2.29 C $3 48,000 28.57% $144,000 $0.86 Total 168,000 100.00% $648,000 $3.86 Sales = Total Variable cost + total fixed cost + profit Break even point is the point where profit = 0 Sales = Total Variable cost + Total fixed cost + 0 Sales - Total Variable cost = Total fixed cost Contribution Margin = Total fixed Cost Let contibution margin for sales mix be Y Determine BEP units by using this equation ($5x14.29%x Y)+($4 x 57.14% x Y)+($3 x 28.57% xY) = $405,000 $3.86 Y = $405,000 Y = $405,000/3.86 1,05,000 units BEP (units) 1,05,000 Product Sales Mix BEP (Units) BEP Sales Mix units A 14.29% 1,05,000 15,000 B 57.14% 1,05,000 60,000 C 28.57% 1,05,000 30,000 Total 100.00% 1,05,000 b) Product Sales Mix Total Units Sales Mix unitsContribution Margin per Unit
Total contribution Margin
A 14.29% 168,000 24,000 $5 $120,000 $0.30 B 57.14% 168,000 96,000 $4 $384,000 $1.00 C 28.57% 168,000 48,000 $3 $144,000 $0.40 Total 100.00% 168,000 $648,000 $1.70 Operating income = TCM - Fixed Costs Operating income = $648,000 - $405,000 $243,000.00Related Questions
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