Question

Pittsburg Steel Manufacturing has a weighted-average unit contribution margin of $20 for its two products, Standard and Supreme. Expected sales for Pittsburg Steel are 40,000 Standard and 60,000 Supreme. Fixed expenses are $1,800,000.4. How many Standards would Pittsburg Steel sell at the break-even point?A) 36,000B)54,000C)60,000D) 90,000Page 1 5. At the expected sales level, Pittsburg Steel's net income will beA) $(800,000).B)$ - 0 -.C)$200,000.D) $2,000,000.

Answer 1

B2 A B C F / fixed expenses weighted average unit contribution margin total sales units Standards' share in sales mix Standards' sales units at the break even point $ 1,800,000 $ 20 90,000 40% 36,000 = hence, the correct answer is A) 36,000 total units sales at expected sales level weighted average unit contribution margin total contribution margin fixed expenses net income 100,000 $ 20 $ 2,000,000 $ 1,800,000 $ 200,000 hence, the correct answer is C) $200,000

for formulas and calculations, refer to the image below -

B2 ABC fixed expenses 1800000 1/ weighted average unit contribution margin 20 total sales units =E2/E3 Standards' share in sales mix |-40000/(40000+60000) | = | Standards' sales units at the break even point |=E4E5 hence, the correct answer is A) 36,000 total units sales at expected sales level weighted average unit contribution margin total contribution margin fixed expenses net income =40000+60000 20 =E10*E11 1800000 =E12-E13 hence, the correct answer is C) $200,000

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