Tiago makes three models of camera lens. Its product mix and contribution margin per unit follow:
| Percentage of Unit sales | Contribution Margin per unit | |||
| Lens A | 25 | % | $ | 38 |
| Lens B | 40 | 30 | ||
| Lens C | 35 | 43 | ||
Required:
1. Determine the weighted-average contribution margin per unit.
2. Determine the number of units of each product that Tiago must sell to break even if fixed costs are $187,000.
3. Determine how many units of each product must be sold to generate a profit of $73,000.
|
Weighted average contribution margin = (38*25%)+(30*40%)+(43*35%) = 36.55 |
|
Breakeven point = Fixed cost/WA Contribution margin = 187,000/36.55% = 5116 Units of A = 5116*25% = 1279 Units of B = 5116*40% = 2046 Units of C = 5116*35% = 1791 |
|
Breakeven point = (187,000+73,000)/36.55% = 7114 Units of A = 7114*25% = 1779 Uniys of B = 7114*40% = 2846 Units of C = 7114*35% = 2490 |
Tiago makes three models of camera lens. Its product mix and contribution margin per unit follow:...