Hi$-$Tech Incorporated produces two different products with the following monthly data

Cell GPS Total

Selling price per unit $100400$

Variable cost per unit $40240$

Expected unit sales $21,0009,00030,000$

Sales mix $\%70\%30\%100\%$

Fixed costs $1,800,000$

Assume the sales mix remains the same at all levels of sales

Required:

$1$ Calculate the weighted average contribution margin per unit

$2$ How many units in total must be sold to break even?

$3$ How many units of each product must be sold to break even?

$4$ How many units in total must be sold to earn a monthly profit of $$180,000?$

$5$ How many units of each product must be sold to earn a monthly profit of $$180,000?$

$6$ Using the information provided, prepare a contribution margin income statement for the month

$7$ Calculate the weighted average contribution margin ratio

$8$ Find the break$-$even point in sales dollars

$9$ How much sales dollars of each product to break$-$even?

$10$ What amount of sales dollars is required to earn a monthly profit of $$540,000?$

$11$ How much sales dollars of each product to earn a montly profit of $$540,000??$

$12$ Assume the contribution margin income statement prepared in requirement $6$ is the company's base case. What is the Margin of Safety in dollars?

Cell GPS Total

Sales $100400500$

Less: Variable $40240280$

Contribution Margin $60160220$

Sales Mix $70\mathrm{.}0\%30\mathrm{.}0\%$

Weighted Average Contribuion Margin:

$142+48=90$

$7$ Weighted Average CM Ratio

Break$-$even point in units $=$ Total fixed costs $+$ Target profit $/$ Weighted average contribution margin per unit

Break$-$even point in units $=+/$

Break$-$even point in units $=/$

$2$ Break$-$even point in units $=$

$3$ BE Units per Product $14,0006,000$

Target Profit in Units $=$ Total fixed costs $+$ Target profit $/$ Weighted average contribution margin per unit

Target Profit in Units $=+/90$

Target Profit in Units $=/$

$4$ Target Profit in Units $=22,000$

$5$ Target Profit Units per product $15,4006,600$

Cell GPS Total

$6$ Sales $2,100,0003,600,0005,700,000$

Less: Variable $840,0002,160,0003,000,000$

Contribution Margin $1,260,0001,440,0002,700,000$

Less Fixed Costs $1,800,000$

Operating Income $900,000$

Break$-$even point in Dollars $=$ Total fixed costs $+$ Target profit $/$ Weighted average contribution margin Ratio

Break$-$even point in Dollars $=+/$

Break$-$even point in Dollars $=/$

$8$ Break$-$even point in Dollars $=$

$9$ BE dollars per product

Target Profit in Dollars $=$ Total fixed costs $+$ Target profit $/$ Weighted average contribution margin ratio

Target Profit in Dollars $=+/$

Target Profit in Dollars $=/$

$10$ Target Profit in Dollars $=$

$11$ Target Profit Dollars per product

Margin of Safety Dollars

Margin of Safety in Dollars $=$ Total Sales $($or Projected Sales$)$ Breakeven Sales

MOS$ $=$ S $-$ BES

MOS$ $=5,700,000-3,333,333$

MOS$ $=2,366,667$

Answer rating: 100% (QA)

1 To calculate the weighted average contribution margin per unit we use the sales mix percentages and the contribution margin per unit for each product Weighted Average Contribution Margin per unit Co... View the full answer