Colorado Sports (CS) manufactures two types of tents. One is made of plastic.  The other is made of gortex. The budgeted per-unit contribution margin for each product follows:

CS expects to incur annual fixed costs of $450,000. The relative sales mix of the products is 60 percent for plastic and 40 percent for gortex.

Required

a. Determine the total number of products (units of plastic and gortex combined) CS must sell to earn a $200,000 profit.

b. How many units each of plastic and gortex tents must CS sell to earn a $200,000 profit?

c. Confirm the answer computed in Requirement b by preparing an income statement using the contribution margin format.

Transcribed Image Text:

Sales price Variable cost per unit Plastic Gortex $ 550 $ 820 (400) Contribution margin per unit $ 150 (720) $ 100