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kogti [31]
2 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]2 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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3 years ago
Why do you think so many people borrow money for large purchases instead of using a sinking fund
sergey [27]
It is so they have more money for the business
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The following summary transactions occurred during 2021 for Bluebonnet Bakers: Cash Received from: Collections from customers $
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8 0
2 years ago
At the beginning of 2016, EZ Tech Company's Accounts Receivable balance was $140,000, and the balance in Allowance for Doubtful
meriva

Answer:

EZ Tech Company

Journal Entries:

Debit Cash Account $210,000

Credit Sales Revenue $210,000

To record sale of goods for cash.

Debit Accounts Receivable $840,000

Credit Sales Revenue $840,000

To record sale of goods on account.

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Credit Accounts Receivable $670,000

To record the receipt of cash on account.

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Credit Accounts Receivable $4,000

To record direct write-off of uncollectibles.

Explanation:

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Uncollectible              -4,000

Ending balance    $306,000

b) The direct write-off of the uncollectible accounts could have also been treated through the Allowance for Doubtful Accounts by debiting the account before crediting it with the Uncollectible Expense account.  Since there is no instruction to the contrary, we have used the direct method instead, for simplicity.

3 0
3 years ago
"Mrs. Smith operates a business in a competitive market. The current market price is $8.10. At her profit-maximizing level of pr
Molodets [167]

Answer:

Mrs.Smith should continue to operate the business in the short run but shut down in the long run.

Explanation:

According to the shut down rule, at the profit-maximizing positive level of output, a business in a competitive market should continue to operate in the short-term if the price equals to or is greater than the average variable cost, but should shut down in the long term if the price is less than or equal to total cost. Here,

price = $8.10

avg variable cost = $8.00

avg total cost = $8.25

Mrs.Smith should continue to operate the business in the short run but shut down in the long run.

6 0
3 years ago
Read 2 more answers
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