Muscle Beach, Inc., makes three models of high-performance weight-training benches. Current operating data are summarized here:...
Muscle Beach, Inc., makes three models of high-performance weight-training benches. Current operating data are summarized here:
| MegaMuscle | PowerGym | ProForce | |||||||
| Selling price per unit | $ | 139 | $ | 202 | $ | 300 | |||
| Contribution margin per unit | 42 | 80 | 58 | ||||||
| Monthly sales volume—units | 2,930 | 2,040 | 1,010 | ||||||
| Fixed expenses per month | Total of $329,900 | ||||||||
a. Calculate the contribution margin ratio of each product. (Round your answers to 1 decimal place.)
b. Calculate the firm's overall contribution margin ratio. (Round your answer to 1 decimal place.)
c. Calculate the firm's monthly break-even point in sales dollars. (Round your intermediate calculations to 1 decimal place.)
d. Calculate the firm's monthly operating income.
e-1. Management is considering the elimination of the ProForce model due to its low sales volume and low contribution margin ratio. As a result, total fixed expenses can be reduced to $279,330 per month. Assuming that this change would not affect the other models, what would be the effect on net operating income.
e-2. Would you recommend the elimination of the ProForce model?
| Yes | |
| No |
f-1. Assume the same facts as in requirement e-1. Assume also that the sales volume for the PowerGym model will increase by 502 units per month if the ProForce model is eliminated. What would be the effect on operating income.
f-2. Would you recommend eliminating the ProForce model?
| Yes | |
| No |
Homework Answers
![Answer to first 4 parts of the guestion: Requirement-(a Mega Muscle $139 Power Selling price per unit Contribution margin per unit Contribution margin ratio [Contribution margin per unit/Selling price per unit] $202 $80 0.4 Pro Force $300 58 0.2 0.3 [Mega-$42/$139; Power $80/$202; Pro-$58/$300] Requirement-(b Mega Muscle 2,930 Power Gym 2,040 Pro Force 1,010 Firm Monthly sales volume - units 5,980 $407,270 $412,080 $303,000 $1,122,350 $123,060 $163,200 $58,580 $344,840 Sales Contribution margin Firms overall Contribution margin ratio [Contribution margin /Sales] 0.3 [$344,840 /$1,122,350]](http://img.homeworklib.com/questions/ed5d3af0-75b8-11ea-a485-234918436832.png?x-oss-process=image/resize,w_560)
![Requirement-(C Breakeven point in sales dollars Fixed expenses/Contribution margin ratio. $329,900 Firms fixed expenses per month Firms overall Contribution margin ratio Firms monthly break-even point in sales 0.3 [Ref: Requirement-(b)] $1,099,666.67 ($329,900/0.3] or 1,099,667 [If final answer is rounded-off to zero decimal place] Firms overall contribution margin Less: Firms fixed expenses per month Firms monthly operating income $344,840 [Ref: Requirement-(b)] $329,900 $14,940](http://img.homeworklib.com/questions/edb68810-75b8-11ea-a849-2f70a484b143.png?x-oss-process=image/resize,w_560)
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Muscle Beach, Inc.,
makes three models of high-performance weight-training benches.
Current operating data are summarized here:...
Muscle Beach, Inc., makes three models of high-performance weight-training benches. Current operating data are summarized here:...
Muscle Beach, Inc., makes three models of high-performance weight-training benches. Current operating data are summarized here: MegaMuscle PowerGym ProForce Selling price per unit $ 138 $ 200 $ 300 Contribution margin per unit 43 79 59 Monthly sales volume—units 3,000 1,930 1,040 Fixed expenses per month Total of $320,300\ a. Calculate the contribution margin ratio of each product. (Round your answers to 1 decimal place.) b. Calculate the firm's overall contribution margin ratio. (Round your answer to 1 decimal place.)...
Muscle Beach, Inc., makes three models of high-performance weight-training benches. Current operating data are summarized here:...
Muscle Beach, Inc., makes three models of high-performance weight-training benches. Current operating data are summarized here: MegaMuscle PowerGym ProForce Selling price per unit $ 131 $ 201 $ 282 Contribution margin per unit 42 75 59 Monthly sales volume—units 3,060 1,910 1,030 Fixed expenses per month Total of $321,400 e-1. Management is considering the elimination of the ProForce model due to its low sales volume and low contribution margin ratio. As a result, total fixed expenses can be reduced to...
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please complete the entire question, try and use the same format if possible Backus Inc. makes...
please complete the entire question, try and use the same format if
possible
Backus Inc. makes and sells many consumer products. The firm's average contribution margin ratio is 35%. Management is considering adding a new product that will require an additional $15,000 per month of fixed expenses and will have variable expenses of $7.80 per unit Required: a. Calculate the selling price that will be required for the new product if it is to have a contribution margin ratio equal...
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please complete the entire question, try and use the same format if
possible
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