Refer to the information for Peace River Products above. Suppose that in the coming year, the company
Question:
Total fixed cost must be increased by $29,100 (making total fixed cost $114,100). Assume that anticipated sales of the other products, as well as their prices and variable costs, remain the same.
Peace River Products Inc. produces and sells yoga-training products: how-to DVDs and a basic equipment set (blocks, strap, and small pillows). Last year, Peace River Products sold 18,000 DVDs and 4,500 equipment sets. Information on the two products is as follows:
Total fixed cost is $85,000.
Required:
1. What is the sales mix of DVDs, equipment sets, and yoga mats?
2. Compute the break-even quantity of each product.
3. Prepare an income statement for Peace River Products for the coming year. What is the overall contribution margin ratio? The overall break-even sales revenue?
4. Compute the margin of safety for the coming year in sales dollars.
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Cornerstones of Financial and Managerial Accounting
ISBN: 978-1111879044
2nd edition
Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen
Question Posted: