Selkirk Chemical Company (SCC) produces three glues that are used in commercial applications. The following information...
Selkirk Chemical Company (SCC) produces three glues that are used in commercial applications. The following information relates to the upcoming year.
|
AQ36 |
B845 |
fX345 |
total |
|
|
Contribution per Gallon |
$30,00 |
$24.00 |
$20.00 |
|
|
Planned Sales (Gallons) |
10,000 |
30,000 |
60,000 |
100,000 |
|
Fixed Costs |
$2,000,000 |
a) What is the expected Income associated with this plan?
|
AQ36 |
B845 |
fX345 |
total |
|
|
Contribution per Gallon |
||||
|
Planned Sales (Gallons) |
||||
|
Fixed Costs |
||||
|
Total Contribution Margin |
||||
|
Income |
b) Assuming that the product mix remains constant what is the breakeven quantity of sales (in gallon) for each product?
|
AQ36 |
B845 |
fX345 |
total |
|
|
Contribution per Gallon |
||||
|
Planned Sales (Gallons) |
||||
|
Mix |
||||
|
Weighted Average Contribution Margin |
||||
|
Fixed Costs |
||||
|
Breakeven Sales* |
*Breakeven sales are rounded up.
c) Suppose that the SCC sales manager believes that while the product mix will remain constant total sales will be 110,000 litres. What will be the expected income at this level of sales?
|
AQ36 |
B845 |
fX345 |
total |
|
|
Contribution Margin |
||||
|
Mix |
||||
|
Planned Sales |
||||
|
Total Contribution Margin |
||||
|
Fixed Costs |
||||
|
Income |
Analysis
The sales manager at SCC now believes that while total sales will be 110,000 liters, the product mix will change as follows.
|
AQ36 |
B845 |
fX345 |
total |
|
|
Contribution Margin |
$30,00 |
$24.00 |
$20.00 |
|
|
Mix |
12% |
32% |
54% |
What is the expected income with this plan?
|
AQ36 |
B845 |
fX345 |
total |
|
|
Contribution Margin |
||||
|
Mix |
||||
|
Planned Sales |
||||
|
Total Contribution Margin |
||||
|
Fixed Costs |
||||
|
Income |
Homework Answers
| AQ36 | B845 | fX345 | total | |
| Contribution per Gallon | 30 | 24 | 20 | |
| Planned Sales (Gallons) | 10,000 | 30,000 | 60,000 | 100,000 |
| Fixed Costs | 2,000,000 | |||
| Total Contribution Margin | 300,000 | 720,000 | 1,200,000 | 2,220,000 |
| Income | 220,000 | |||
| AQ36 | B845 | fX345 | total | |
| Contribution per Gallon | 30 | 24 | 20 | |
| Planned Sales (Gallons) | 10,000 | 30,000 | 60,000 | 100,000 |
| Mix | 0.1 | 0.3 | 0.6 | |
| Weighted Average Contribution Margin | 3 | 7 | 12 | 22 |
| Fixed Costs | 2,000,000 | |||
| Breakeven Sales* | 90,090 | |||
| AQ36 | B845 | fX345 | total | |
| Contribution Margin | 30 | 24 | 20 | |
| Mix | 0.1 | 0.3 | 0.6 | |
| Planned Sales | 11000 | 33000 | 66000 | 110000 |
| Total Contribution Margin | 330,000 | 792,000 | 1,320,000 | 2442000 |
| Fixed Costs | 2,000,000 | |||
| Income | 442,000 | |||
| AQ36 | B845 | fX345 | total | |
| Contribution Margin | 30 | 24 | 20 | |
| Mix | 0.12 | 0.32 | 0.54 | |
| Planned Sales | 13200 | 35200 | 59400 | 107800 |
| Total Contribution Margin | 396,000 | 844,800 | 1,188,000 | 2428800 |
| Fixed Costs | 2,442,000 | |||
| Income | (13,200) |
The sales mix in last part do not total 100%, you might want to recheck that in the question
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