contestada

Waterways has a sales mix of sprinklers, valves, and controllers as follows. Annual expected sales:

Sale of sprinklers 512,712 units at $27.00
Sale of valves 1,580,862 units at $11.00
Sale of controllers 42,726 units at $43.00
Variable manufacturing cost per unit:
Sprinklers $14.00
Valves $8.00
Controllers $30.00
Fixed manufacturing overhead cost (total) $709,000

Variable selling and administrative expenses per unit:
Sprinklers $1.00
Valves $1.00
Controllers $3.00
Fixed selling and administrative expenses (total) $1,678,616

Required:
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.
c. Assuming the sales mix remains the same, what is the break-even point in units for these products?

Respuesta :

anthougo

Answer:

Waterways

                                               Sprinklers      Valves     Controllers

a. Sales mix in units                     12                 37              1

or  in percentage                       24%               74%           2%

b. The weighted-average unit contribution margin

= $4.56

c. Break-even points in units

= 523,600 units

Explanation:

a) Data and Calculations:

                                               Sprinklers      Valves     Controllers    Total

Annual expected sales            512,712     1,580,862       42,726    2,136,300

Sales price per unit                  $27.00        $11.00           $43.00

Variable costs per:

Manufacturing                            14.00          8.00              30.00

Selling and Admin. expense        1.00          1.00                3.00

Total variable costs per unit    $15.00        $9.00           $33.00

Contribution margin per unit  $12.00         $2.00           $10.00

Fixed manufacturing cost  =      $709,000

Fixed selling and admin exp. = $1,678,616

Total fixed costs =                     $2,387,616

Sales mix based on unit sales  0.24           0.74             0.02

=                                                    12                37                1

Weighted-average unit contribution margin

=                                               $12 * 0.24  +  $2.00 * 0.74   + $10 * 0.02

=                                               $2.88         +     $1.48            +  $0.20

= $4.56

Break-even point in units =  Fixed costs/Weighted-average Contribution margin per unit

= $2,387,616/$4.56

= 523,600 units