New Wave Technology Inc. manufactures and sells two products, MP3 players and sa
ID: 454513 • Letter: N
Question
New Wave Technology Inc. manufactures and sells two products, MP3 players and satellite radios. The fixed costs are $297,000, and the sales mix is 80% MP3 players and 20% satellite radios. The unit selling price and the unit variable cost for each product are as follows:
a. Compute the break-even sales (units) for the overall product, E.
units
b. How many units of each product, MP3 players and satellite radios, would be sold at the break-even point?
Products Unit Selling Price Unit Variable Cost MP3 players $50 $40 Satellite radios 130 80Explanation / Answer
Products MP3 Satellite Sales Mix (a) 80% 20% Selling Price (b) $50.00 $130.00 Variable Cost ( c) $40.00 $80.00 Contribution per unit (d = b - c) $10.00 $50.00 Weighted Contribution (e = d * a) $8.00 $10.00 a Total Fixed Cost = $297000 Weighted Contribution = $18 Break Even Point = 297000/15 = 16500 units b. Fixed Cost Apportioned as per Sales Mix (f) $237,600.00 $59,400.00 MP3 = 297000 * 80% Satellite = 297000 * 20% MP3 Satellite Breakeven Point (f/d) 23760 1188
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