2. Ryan\'s Landscaping sells a quality brand of hoes, shovels, and rakes in a sa

Question

            2.   Ryan's Landscaping sells a quality brand of hoes, shovels, and rakes in a sales mix of 2:4:2. The company's fixed costs are $61,600. Product data include the following:

Unit Sales Price

Unit Variable Costs

Hoes

$12

$8

Shovels

15

7

Rakes

16

8

a. Compute the weighted-average contribution margin

b. Determine the weighted-average breakeven point

c. Calculate the breakeven point for each product.

d. Determine the breakeven point in sales dollars.

Unit Sales Price

Unit Variable Costs

Hoes

$12

$8

Shovels

15

7

Rakes

16

8

Explanation / Answer

Unit Sales Price Unit Variable Costs Contribution (Sales Price - Variable Cost Sales Mix Ratio Combined Contribution Hoes $12 $8 $4 2 $1 4 * 2/8 Shovels 15 7 $8 4 $4 8 * 4/ 8 Rakes 16 8 $8 2 $2 8 * 2/8 8 $7 a) weighted-average contribution margin $7 b) weighted-average breakeven point Fixed Cost / weighted-average contribution margin 61600 / 7 8800 units c) breakeven point for each product. Hoes 8800 * 2/8 2200 Shovels 8800 * 4/8 4400 Rakes 8800 * 2 / 8 2200 d) breakeven point in sales dollars. Break Even point for each product * Sales Price 2200 * 12 + 4400 * 15 + 2200 * 16 127600

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