Personal Electronix sells iPads and iPods. The business is divided into two divi

Question

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 $838,400 $471,600 $1,310,000 Variable costs 620,416 259,380 879,796 Contribution margin $217,984 $212,220 430,204 Fixed costs 132,674 Net income $297,530 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 % LINK TO TEXT Calculate the company’s weighted-average contribution margin ratio. (Round computations and final answer to 2 decimal places, e.g. 15.26%.) Weighted-average contribution margin ratio % LINK TO TEXT Calculate the company’s break-even point in dollars. (Round computations to 2 decimal places and final answer to 0 decimal places, e.g. 1,526.) Break-even point $ LINK TO TEXT Determine the sales level in dollars for each division at the break-even point. (Round computations to 2 decimal places and final answers to 0 decimal places, e.g. 1,526.) Break-even point iPad division $ iPod division $

Explanation / Answer

Sales Mix %: I Pad = 838400 / 1310000 * 100 = 64%

I Pod = 471600 / 1310000 * 100 = 36%

Contribution Margin Ratio = Contribution / sales * 100

I Pad = 217984 / 1310000 * 100 = 16.64%

I Pod = 259380 / 1310000 * 100 = 19.80%

Weighted Average Contribution Margin = Aggregate Contribution / Aggregate Sales * 100

= 430204 / 1310000 * 100 = 32.84%

Break even Point (Dollar) = Fixed Cost / Contribution Margin

= 132674 / 32.84% = $404001.22

Break Even point : Ipad = $404001.22 * 64% = $258560.78

Ipod = $404001.22 * 36% = $145440.44

Particulars I Pad Division I Pod Division Total Sales 838400 471600 1310000 - Variable Cost 620416 259380 879796 Contribution 217984 212220 430204 - Fixed Cost 132674 Net Income 297530

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