Solve part 3 Waterways Continuing Problem his is a continuation of the Waterways

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Solve part 3
Waterways Continuing Problem his is a continuation of the Waterways Problem from Chapters 14 through 18) WCP19 Part 1 Waterways has a sales mix of sprinklers, valves, and controllers as follows Annual expected sales: Sale of sprinklers Sale of valves Sale of controllers 460,000 units at $26.50 1,480,000 units at $11.20 60,000 units at $42.50 Variable manufacturing cost per unit Sprinklers Valves Controllers $13.96 $ 7.95 $29.75 Fixed manufacturing overhead cost (total) $760,000 Variable selling and administrative expenses per unit Sprinklers Valves Controllers $1.30 $0.50 Fixed selling and administrative expenses (total) $1,600,000 Instructions (a) Determine the sales mix based on unit sales for each product. (b) Using the annual expected sales for these products, determine the weighted-average unit contribution margin for these three products. (Round to two decimal places.) (c) Assuming the sales mix remains the same, what is the break-even point in units for these products? Part 2- Skip Part 3 he section of Waterways that produces controliers for the company provided the following informaticon Sales for month of February: 4,000 Variable manufacturing cost per unit: $9.75 Sales price per unit: $42.50 Fxed manufacturing overhead cost (per month for controllers): $81,000 Faeab Sellng and administrative expenses per unit $3.00 Fixed selling and administrative expenses (per month for controllers): $13,122 Instructions Cperain leverage, the break-even point in dollars, and the margin of safety ratio for Waterways Corporation on this product. o) Using this infomation for the controlers, determine the contrbution margin rato, the degree of

Explanation / Answer

Sales (4000 units@ 42.50) 170000 Less: Variable cost (4000 units@ (9.75+3)) 51000 Contribution 119000 Less: Fixed cost (81000+13122) 94122 Net Operating income 24878 CM ratio = Total contribution / total sales *100 = 119000/170000 *100 = 70% Degree of operating leverage = total contribution /Net operating income                                                                 ( 119,000 / 24878 )= 4.78 Break even point in $ = Total fixed cost / CM ratio = 94122/70 *100 = $ 134,460 Margin of safety = total sales - Break even sales = 170000-134460 = $ 35,540 Margin of safety ratio = 35540 /170000 *100 = 20.91%

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