A furniture manufacturer specializes in wood tables. The tables sell for $80 per

Question

A furniture manufacturer specializes in wood tables. The tables sell for $80 per unit and incur $28 per unit in variable costs. The company has $4,680 in fixed costs per month. Expected sales are 190 tables per month.

19. The company begins manufacturing wood chairs to match the tables. Chairs sell for $42 each and have variable costs of $20. The new production process increases fixed costs to $6,980 per month. The expected sales mix is one table for every four chairs. Calculate the breakeven point in units for each product. First, complete the table below to calculate the weighted-average contribution margin. (Round the weighted-average contribution margin per unit to the nearest cent.) Tables Chairs Total Contribution margin Weighted-average contribution margin per unit Next, calculate the breakeven point in units for the "package" of products-one table and 4 chairs. Start by selecting the formula and then enter the amounts to compute the breakeven point in units. (Abbreviation used: CMcontribution margin. Complete all answer boxes. For items with a zero value, enter "O". Round the breakeven point the required sales in units-up to the nearest whole unit. For example, 245.25 would be rounded to 246.) Required sales in units Finally, calculate the breakeven point in units for each product. (Round the breakeven point the required sales in units-up to the nearest whole unit. For example, 245.25 would be rounded to 246.) = Breakeven sales of units Table Chairs

Explanation / Answer

[52*1/5]+[22*4/5]

10.4+17.6

28

Fixed cost /weighted average contribution per unit =break even point

[6980+4680]/28

417 units

2)Table : Overall breakeven *proportion of table sales /total sales

        = 417*1/5

            = 83 tables

chairs : 417 *4/5

   = 334 chairs

Table chairs Total selling price perunit 80 42 less:variable cost per unit (28) (20) contribution margin per unit 52 22 number of units 190 190*4= 760 Total contribution margin 52*190=9880 16720 26600

[52*1/5]+[22*4/5]

10.4+17.6

28

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