Exercise 19-10 Personal Electronix sells iPads and iPods. The business is divide
ID: 2460051 • Letter: E
Question
Exercise 19-10
Personal Electronix sells iPads and iPods. The business is divided into two divisions along product lines. CVP income statements for a recent quarter’s activity are presented below.
iPad Division
iPod Division
Total
Sales
$780,000
$420,000
$1,200,000
Variable costs
546,000
235,200
781,200
Contribution margin
$234,000
$184,800
418,800
Fixed costs
142,392
Net income
$276,408
Determine sales mix percentage and contribution margin ratio for each division. (Round answers to 0 decimal places, e.g. 15%.)
Sales Mix Percentage
iPad division
%
iPod division
%
Contribution Margin Ratio
iPad division
%
iPod division
%
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Calculate the company’s weighted-average contribution margin ratio. (Round answer to 2 decimal places, e.g. 15.26%.)
Weighted-average contribution margin ratio
%
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Calculate the company’s break-even point in dollars. (Round answer to 0 decimal places, e.g. 1,526.)
Break-even point
$
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Determine the sales level in dollars for each division at the break-even point. (Round answers to 0 decimal places, e.g. 1,526.)
Break-even point
iPad division
$
iPod division
$
Exercise 19-10
Personal Electronix sells iPads and iPods. The business is divided into two divisions along product lines. CVP income statements for a recent quarter’s activity are presented below.
iPad Division
iPod Division
Total
Sales
$780,000
$420,000
$1,200,000
Variable costs
546,000
235,200
781,200
Contribution margin
$234,000
$184,800
418,800
Fixed costs
142,392
Net income
$276,408
Explanation / Answer
Sales Mix Percentage Sales Percentage Sales Mix percentage I Pad Division 780000 780000*100/1200000 65 I Pod Division 420000 420000*100/1200000 35 Total 1200000 Contribution Margin Ratio Contribution Sales Ratio Contribution Margin Ratio I Pad Division 234000 780000 234000/780000 30% I Pod Division 184800 420000 184800/420000 44% Total 418800 1200000 Break Even Point = Fixed Cost/ PV Ratio PV Ratio = Contribution/ Sales 418800/1200000 0.349 Break Even 142392/.349 408000 The Break Even Sales will be $ 408000
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