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WaterSports USA sells three types of wake boards. Information relative to sales in units and dollars are given in the table below:

Sales Category

Wakeman

Jumper

Novice

Total

Sales in Units

1,000

5,000

2,000

8,000

Price per Unit

$200

$150

$100

Variable cost per Unit

$150

$100

$50

Fixed costs are projected to be $100,000. Carry all calculations to four decimal places.

Compute the contribution margin per unit.

Compute the weighted contribution margin.

Compute the break-even in total units.

Compute the break-even per product.

Discuss briefly the usefulness of the computation in the business world.

Sales Category

Wakeman

Jumper

Novice

Total

Sales in Units

1,000

5,000

2,000

8,000

Price per Unit

$200

$150

$100

Variable cost per Unit

$150

$100

$50

Explanation / Answer

Answer a. Wakeman Jumper Novice Selling Price per Unit                 200                 150                 100 Variable Cost per Unit                 150                 100                    50 Contribution per Unit                    50                    50                    50 Answer b. Wakeman Jumper Novice Total Contribution per Unit                    50                    50                    50 No. of units sold              1,000              5,000              2,000               8,000 Total Weighted Conrtibution           50,000         250,000         100,000          400,000 Weighted Contribution per unit = $400,000 / 8,000 units = $50 per unit Answer c. BEP (In Units) = Fixed Cost / Contribution per unit BEP (In Units) = $100,000 / $50 = 2,000 Units Answer d. Total BEP (in Units)              2,000 Wakeman - 2,000 Units X 5/40                 250 Jumper - 2,000 Units X 25/40              1,250 Novice - 2,000 Units X 10/40                 500 Answer e. Usefulness of Break Even Point analysis are: 1. BEP shows that how long the enterpeneur would take to reach the profitability. 2. Helps management and investors to understand the viability of business proposition and the level of risks involved. 3. Calculations are quick and easy.

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