Question 17 (1 point) X company has the following information concerning the 2 p
ID: 2545917 • Letter: Q
Question
Question 17 (1 point) X company has the following information concerning the 2 products that it sells. Product 2 $300 $200 Product 1 Sales Price per unit Variable cost per unit $500 The company sells 12 units of Product 2 for each unit of Product 1 that it sells. How many units of Product 2 must it sell to $800 breakeven if fixed costs total $75,000? abs Do not enter dollar signs or commas and round to the nearest unit. For example enter 2,345.67 as 2346 Save Question 18 (1 point) X Company has the following information Sales Revenue Variable Costs Contribution Margin Fixed Costs Net Income $800,000 500,000 300,000 200,000 100,000 Compute the company's operating leverage factor. abRound your answer to nearest whole number. For example, enter 5.32 as 5. SaveExplanation / Answer
Answer
Product 1
Product 2
SP per unit
800
300
Variable cost per unit
500
200
Contribution margin
300
100
Contribution margin ratio (A)
0.375
0.333333333
Sales Mix
1
12
Sales Mix % (B)
[1/13] 0.076923077
[12/13] 0.923076923
Weighted Average contribution ratio (A x B)
0.028846154 (a)
0.307692308 (b)
A
Total weighted average contribution margin (a + b)
0.336538462
B
Fixed cost
$75000
C=B/A
Break Even point in $
$222857.1429
D=C x Sales Mix Product 2
Product 2 Sales $
$205714.2857
E=D / $300
Units to be sold of Product 1
686 units
A
Contribution margin
300000
B
Net Income
100000
C=A/B
Operating Leverage Factor
3
A
Operating leverage
2.5
B
% Increase in Sales
10%
C=A x B
% increase in Net income
25
Changes
Effect on Break Even
Reason
The selling price per unit increases
The breakeven point will decrease
The contribution margin will increase
The company's fixed cost increases
The breakeven point will increase
Fixed cost (numerator) increase will increase BEP
Company's Variable cost per unit increase
The breakeven point increases
The contribution margin will decrease
variable cost per unit decreases and fixed cost increases
The effect on BEP cannot be determined from information.
selling price per unit decreases and fixed cost increases
The effect on BEP cannot be determined from information.
Product 1
Product 2
SP per unit
800
300
Variable cost per unit
500
200
Contribution margin
300
100
Contribution margin ratio (A)
0.375
0.333333333
Sales Mix
1
12
Sales Mix % (B)
[1/13] 0.076923077
[12/13] 0.923076923
Weighted Average contribution ratio (A x B)
0.028846154 (a)
0.307692308 (b)
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