Homework Answers
| 1 | Gross Margin Income Statement | |||||||
| Particulars | Luggage Carrier | Computer Carrier | Total | Notes | ||||
| a | Selling Price Per unit | $ 52.00 | $ 44.00 | |||||
| b | Variable Production Cost | $ 40.00 | $ 30.00 | |||||
| c | Gross Margin | $ 12.00 | $ 14.00 | a-b | ||||
| d | Sales in units | 160000.00 | 40000.00 | |||||
| e | Gross margin exclusing fixed Cost | $ 19,20,000.00 | $ 5,60,000.00 | $ 24,80,000.00 | d x c | |||
| f | Fixed Production Cost | $ 10,00,000.00 | ||||||
| g | Gross Margin | $ 14,80,000.00 | e-f | |||||
| 2 | Contribution Margin Income Statement | |||||||
| Particulars | Luggage Carrier | Computer Carrier | Total | |||||
| a | Selling Price Per unit | $ 52.00 | $ 44.00 | |||||
| b | Variable Production Cost | $ 40.00 | $ 30.00 | |||||
| c | Variable Selling Cost | $ 6.00 | $ 3.00 | |||||
| d | Contribution per Unit | $ 6.00 | $ 11.00 | a-b-c | ||||
| e | Sales in units | 160000.00 | 40000.00 | |||||
| f | Total Contribution | $ 9,60,000.00 | $ 4,40,000.00 | $ 14,00,000.00 | e x d | |||
| Products are sold in ration of 4 luggage carrier to one computer Carrier | ||||||||
| Sales in units | ||||||||
| Luggage Carrier | 200000 units x 4/5 = | 160000 | ||||||
| Computer Carrrier | 200000 units x 1/5 = | 40000 | ||||||
| 3 | Breakeven point = | Total Fixed Cost /Weighted Average contribution | ||||||
| Total Fixed Cost | $ 12,50,000.00 | |||||||
| Weighted Average contribution in 4:a ratio | ||||||||
| ( $ 6 x 4/5) + (11 x 1/5) = | $ 7.00 | |||||||
| Therefore Break even point = $ 1,250,000/$7 = | $ 1,78,571.43 | |||||||
| Rounded to | 1,78,571.00 | |||||||
| Luggage Carrier | 178571x4/5 | 1,42,857.00 | ||||||
| Computer Carrrier | 178571x1/5 | 35,714.00 | ||||||
| 4 | Income Statement | |||||||
| Particulars | Luggage Carrier | Computer Carrier | Total | Notes | ||||
| a | Contribution per Unit | $ 6.00 | $ 11.00 | |||||
| b | Sales Unit in new ratio (3:2) | 1,20,000.00 | 80,000.00 | 2,00,000.00 | ||||
| c | Total Contribution | 7,20,000.00 | 8,80,000.00 | 16,00,000.00 | a x b | |||
| d | Fixed Production Cost | $ 10,00,000.00 | ||||||
| e | Fixed Selling Cost | $ 2,50,000.00 | ||||||
| f | New Advertising Cost | $ 1,00,000.00 | ||||||
| g | Net Income under new mix | $ 2,50,000.00 | c-d-e-f | |||||
| h | Contribution under old mix ie., 4:1 | $ 9,60,000.00 | $ 4,40,000.00 | $ 14,00,000.00 | ||||
| i | Fixed Production Cost | $ 10,00,000.00 | ||||||
| j | Fixed Selling Cost | $ 2,50,000.00 | ||||||
| k | Net Income under Old mix | $ 1,50,000.00 | h-i-j | |||||
| Sales in units | ||||||||
| Luggage Carrier | 200000 units x 3/5 = | 1,20,000.00 | ||||||
| Computer Carrrier | 200000 units x 2/5 = | 80,000.00 | ||||||
| Decision |
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