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Answer:
Instructions are listed below.
Explanation:
Giving the following information:
The Ronowski Company has three product lines of belts—A, B, and C— with contribution margins of $3, $2, and $1, respectively. The president foresees sales of 200,000 units in the coming period, consisting of 20,000 units of A, 100,000 units of B, and 80,000 units of C. The company’s fixed costs for the period are $255,000.
First, we need to calculate the weighted participation of each line in the total sales:
Sales= 200,000
A= 20,000/200,000= 0.10
B= 100,000/200,000= 0.50
C= 80,000/200,000= 0.40
1) Break-even point (units)= Total fixed costs / (weighted average selling price - weighted average variable expense)
We don't have the information regarding selling price and variable cost. But we can calculate the weighted average contribution margin:
weighted average contribution margin= contribution margin of A* weighted participation on sales + cm of B* weighted participation on sales + cm of C*weighted participation on sales
weighted average contribution margin= 3*0.10 + 2*0.5 + 1*0.4= 1.7
Break-even point (units)= 255,000/1.7= 150,000 units
2) Total contribution margin= 20,000*3 + 100,000*2 + 80,000= $340,000
Operating income= contribution margin - fixed costs= 340,000 - 255,000= $85,000
3) A= 20,000 units
B= 80,000 units
C= 100,000 units
Total contribution margin= 20,000*3 + 80,000*2 + 100,000= $320,000
Operating income= contribution margin - fixed costs= 320,000 - 255,000= $65,000
4) We have to recalculate the weighted participation in sales:
Sales= 200,000
A= 20,000/200,000= 0.10
B= 80,000/200,000= 0.40
C= 100,000/200,000= 0.50
weighted average contribution margin= 3*0.10 + 2*0.4 + 1*0.5= 1.6
Break-even point (units)= 255,000/1.6= 159,375 units
Answer 1 :
Given Data:
1 .Belts with contribution margins:
- A=$3,
- B=$2
- C=$1,
2.Sales = 200,000 units
- A=20,000 units
- B=100,000 units of
- C=80,000 units
3.Fixed costs= $255,000.
Formula:
- Break-even point (units)= Total fixed costs / (weighted average selling price - weighted average variable expense)
weighted participation of each line in the total sales:
Sales= 200,000
A= 20,000/200,000= 0.10
B= 100,000/200,000= 0.50
C= 80,000/200,000= 0.40
- Weighted average contribution margin= 3*0.10 + 2*0.5 + 1*0.4
- Weighted average contribution margin = 1.7
- Break-even point (units)= 255,000/1.7= 150,000 units
The company's Break Even Point is $150000 units.
Answer 2)
- Total contribution margin= 20,000*3 + 100,000*2 + 80,000
- Total contribution margin= $340,000
The total contribution margin when 200,000 units are sold is $340,000.
- Operating income= contribution margin - fixed costs
- Operating income= 340,000 - 255,000
- Operating income= $85,000
The operating income is $85000.
Answer 3:
- A= 20,000 units
- B= 80,000 units
- C= 100,000 units
- Total contribution margin= 20,000*3 + 80,000*2 + 100,000
Total contribution margin= $320,000
- Operating income= contribution margin - fixed costs
- Operating income= 320,000 - 255,000
- Operating income= $65,000
The operating income be if 20,000 units of A, 80,000 units of B, and 100,000 units of C were sold is $65000.
Answer 4:
Given Data:
- Sales= 200,000
- A= 20,000/200,000= 0.10
- B= 80,000/200,000= 0.40
- C= 100,000/200,000= 0.50
Weighted average contribution margin= 3*0.10 + 2*0.4 + 1*0.5
- Weighted average contribution margin= 1.6
Break-even point (units)= 255,000/1.6
Break-even point (units)= 159,375 units
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