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kogti [31]
3 years ago
13

Sales Mix and Break-Even Analysis Michael Company has fixed costs of $2,313,840. The unit selling price, variable cost per unit,

and contribution margin per unit for the company's two products follow: Product Selling Price Variable Cost per Unit Contribution Margin per Unit QQ $640 $380 $260 ZZ 460 280 180 The sales mix for Products QQ and ZZ is 85% and 15%, respectively. Determine the break-even point in units of QQ and ZZ. If required, round your answers to the nearest whole number. a. Product QQ units b. Product ZZ units
Business
1 answer:
Fed [463]3 years ago
5 0

Answer:

a.

Break even in units of QQ is 7930 units

b.

Break even in units of ZZ is 1400 units

Explanation:

To calculate the break even in units of each product, we first need to find out the overall break even point in units for the company. The over all break even point in units for a two product company is,

Overall Break even in units =  Total Fixed costs / Weighted average contribution margin per unit

Where,

Weighted average contribution margin per unit = Weight of Product A in sales mix * Contribution per unit of Product A + Weight of Product B in sales mix * Contribution per unit of Product B

Weighted average CM per unit = 0.85 * 260 + 0.15 * 180

Weighted average CM per unit = $248 per unit

Over all break even in units = 2313840 / 248     =  9330 units

a.

Break even in units Product QQ = 9330 * 0.85 = 7930.5 rounded off to 7930 units

b.

Break even in units Product ZZ = 9330 * 0.15 = 1399.5 rounded off to 1400 units

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A traditional GAAP income statement does not help managers to predict the financial results of their decisions. Which of the fol
Amiraneli [1.4K]

Answer:

A) The GAAP statement is based on cost function rather than cost behavior.

Explanation:

Income statements that follow GAAP rules categorizes expenses based on their business function: product, selling or administrative.

While cost behavior categorizes costs based on how they influence a company's activities: variable, fixed and mixed. When a manager wants to measure the impact of any decision he/she makes, they need to use this type of categorization. For example, if fixed costs increase, what is the new break even point? If variable costs decrease, how is the marginal cost affected?

7 0
3 years ago
Northwest Fur Co. started 2021 with $103,000 of merchandise inventory on hand. During 2021, $560,000 in merchandise was purchase
Naya [18.7K]

Answer:

The cost of goods available for sale is $650,100

Explanation:

Credit terms of 3/15, n/45 means that 3% discount for the payment within 15 days and the full amount to be paid within 45 days.

The discounts Northwest Fur Co. took = $560,000 x 3% = $16,800

Northwest uses a perpetual inventory system and the gross method to record purchases.

Net Purchases = Purchases - Purchase Returns - Purchases Discounts + Freight-In = $560,000 - $4,900 - $16,800 + $8,800 = $547,100

The cost of goods available for sale = Beginning merchandise inventory + Net Purchases = $103,000 + $547,100 = $650,100

4 0
3 years ago
Layla made a snide remark to her colleague that he "looks at the customer like henry ford probably did." what did she mean by su
Anarel [89]
She made a snide remark means she's looking to her colleague in a negative or insulting way. If her action is can be compared with how he looks at the customer like henry ford probably did.

Henry Ford is a well-known businessman. What Layla tried to show is that she collogue should treat well their customer because of the source of their money or company's income. 
8 0
3 years ago
A manufacturing company producing medical devices reported $59 million in sales over the last year. At the end of the same year,
kaheart [24]

Answer:

The inventory TO is 3.6875

Explanation:

\frac{Sales}{Average Inventory} = $Inventory Turnover

​where:

$$Average Inventory=(Beginning Inventory + Ending Inventory)/2

Considering there is not sufficient information to calculate the begining inventory <u>we are going to work only with the ending inventory </u>so:

\frac{59,000,000}{16,000,000} = 3.6875

The inventory TO is 3.6875 This means the company sales their inventory almost 4 times per year.

4 0
3 years ago
Businesses that strongly focus on customer satisfaction tend to: a. be less successful as there is deterioration in the quality
Brut [27]

Answer:

c. transform their current customers into loyal advocates for themselves

Explanation:

Customer satisfaction is the utmost priority of the company.  By satisfaction its customers, the company could accomplish its set targets due to which is able to take the competitive advantage so that it could easy for the company for achieving its goals and objectives

The customer satisfaction with the company products when he or she feels that he or she invested the right amount at the right place  

So, the company aims to convert its current customers to permanent customers or current customers into loyal advocates

4 0
3 years ago
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