Answer:
Tiago
1. Weighted-average contribution margin per unit:
Weighted-Average
Contribution margin
per unit
Lens A $9.5
Lens B 12.0
Lens C 15.05
2. Break-even point (units) for each = Fixed cost/Contribution margin per unit
= Lens A = 4,921 units
Lens B = 6,233 units
Lens C = 4,349 units
3. Units to generate a profit target: = (FC+ Target Profit)/Contribution per unit
Lens A = 6,842 units
Lens B = 8,667 units
Lens C = 6,047 units
Explanation:
a) Data and Calculations
Percentage of Contribution Weighted-Average
Unit sales Margin per unit Contribution margin per unit
Lens A 25 % $ 38 $9.5
Lens B 40 30 12.0
Lens C 35 43 15.05
Fixed Costs of $187,000:
Lens A = 25% of $187,000 = $46,750
Lens B = 40% of $187,000 = $74,800
Lens C = 35% of $187,000 = $65,450
Break-even point (units) for each = Fixed cost/Contribution margin per unit
= Lens A = $46,750/$9.5 = 4,921 units
Lens B = $74,800/$12 = 6,233 units
Lens C = $65,450/$15.05 = 4,349 units
Profit of $73,000
Lens A = 25% of $73,000 = $18,250
Lens B = 40% of $73,000 = $29,200
Lens C = 35% of $73,000 = $25,550
Units to generate a profit target: = (FC+ Target Profit)/Contribution per unit
Lens A = ($46,750 + $18,250)/$9.5 = 6,842 units
Lens B = ($74,800 + $29,200)/$12 = 8,667 units
Lens C = ($65,450 + $25,550)/$15.05 = 6,047 units
