Question

Waterways has a sales mix of sprinklers, valves, and controllers as follows.

Answer 1

Answer:

A.

Sales Mix is 23 : 74 : 3

B.

$567.17

C.

sprinklers = 95,726 units

valves  = 303,826 units

controllers = 12,486 units

Explanation:

the sales mix based on unit sales for each product

sprinklers = 460,000 units

valves  = 1,480,000 units

controllers = 60,000 units

this can then be expressed as :

460,000 : 1,480,000  : 60,000

expressed in lowest terms as :

23 : 74 : 3

the weighted-average unit contribution margin for these three products.

weighted-average unit contribution margin is the sum of contribution per units with the mix applied to each contribution margin.

unit contribution margin are

sprinklers = $12.54

valves  = $3.25

controllers = $12.75

weighted-average unit contribution margin =  $12.54 x 23 + $3.25 x 74 + $12.75 x 3 = $567.17

the break-even point in units for these products

break-even point in units = Fixed Cost ÷ Contribution per unit

                                          = ($760,000 + $1,600,000) ÷ $567.17

                                          = 4,162 units

Multiplying this with each mix we have :

sprinklers = 95,726 units

valves  = 303,826 units

controllers = 12,486 units