Sales Mix and Break-Even Analysis Michael Company has fixed costs of $1,980,720.

Question

Sales Mix and Break-Even Analysis

Michael Company has fixed costs of $1,980,720. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below.

The sales mix for products Q and Z is 55% and 45%, respectively. Determine the break-even point in units of Q and Z. If required, round your answers to the nearest whole number.

a. Product Q  units

b. Product Z  units

Operating Leverage

Cartersville Company reports the following data:

Sales $592,700
Variable costs 385,300
Fixed costs 156,800

Determine Cartersville Company's operating leverage. Round your answer to one decimal place.

Margin of Safety

The Ira Company has sales of $800,000, and the break-even point in sales dollars is $568,000.

Determine the company's margin of safety as a percent of current sales. Enter your answer rounded to one decimal place.
%

Explanation / Answer

Break even points in units Fixed cost /Contribution per unit Product Q Z Selling Price 480 680 Variable Cost per unit 200 440 Contribution Margin per unit 280 240 Fixed Cost             1,089,396        891,324 Break even points in units                    3,891            3,714 Operating Leverage Sales                592,700 variable Cost                385,300 Contribution                207,400 Fixed Cost                156,800 Operating Profit                  50,600 Operating leverage                           4 Times Margin Of safety Sales- Break even Sale Margin Of safety 800000-568000 =       232,000

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