2. Morgan Corporation sells two product lines. The sales mix of the product line

Question

2. Morgan Corporation sells two product lines. The sales mix of the product lines is: Standard, 60% and Deluxe, 40%. The cotribution margin ratio of each line is: Standard, 35%; and Deluxe. 45%, Garrett's fixed costs are S 1,950,000. What is the dollar amount of Deluxe sales at the break-even point? 3. Trail King manufactures mountain bikes. It has fixed costs of $5,360,000. Trail King's sales mix and contribution margin per unit is shown as follows: Contribution Margin Sales Mix Destroyer 20% Voyaget 55% Rebel 25% $120 $ 60 Instructions Compute the number of each type of bike that the company would need to sell in order to break even under this product mix. 4. Account-Able Company provides primarily two lines of service: accounting and tax. Accounting related services represent 60% of its revenue and provide a contribution margin ratio of 30%. Tax company's fixed costs are $9,000,000. Instructions (a) Calculate the revenue from each type of service that the company must achieve to break even. Account-Able earn from tax services if it achieves this goal with the current sales mix?

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Q2 Paticulars Standard Deluxe Total Contribution margin ratio 60% 40% 100% Sales Mix 35% 45%                       0.80 Weighted Contribution margin ratio 21.0% 18.0% 39.00% Fixed costs       1,950,000.00 Break even sales in $ = 1950,000/39%       5,000,000.00 Q3 Destroyer Voyager Rebel Contribution Margin                   120.00                     60.00                     40.00 Sales Mix 20% 55% 25% 100% Weighted Contribution margin                     24.00                     33.00                     10.00                     67.00 Fixed costs       5,360,000.00 Break even point in units = 5360,000/67             80,000.00 No of each type at BEP = Sales Mix *80,000             16,000.00             44,000.00             20,000.00             80,000.00 Q4 Accounting Tax Total Revenue Mix 60% 40% 100% Contribution margin ratio 30% 45% Weighted contribution margin ratio 18.00% 18.00% 36.00% Fixed costs       9,000,000.00 BEP in $ = 9m/36%    25,000,000.00 Revenue from each type    15,000,000.00    10,000,000.00 b) Desired income       1,800,000.00 Fixed costs       9,000,000.00 Desired contribution    10,800,000.00 Desired revenue= 10.8m/36%    30,000,000.00 Revenue from each type    18,000,000.00    12,000,000.00

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