1. Assume the Midwest Furniture Company sells two kinds of picnic tables, standard and premium. At...

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1. Assume the Midwest Furniture Company sells two kinds of picnic tables, standard and premium. At a 3:1 unit sales mix in which Midwest sells three standard tables for every premium table, the following revenue and cost information is available. + Unit selling price Unit variable costs Unit contribution margin Standard Table $200 $125 $75 Premium Table $600 $ 275 $325 Fixed costs per month: $18,150 A) Assuming a 3:1 sales mix, calculate Midwest Furniture's current monthly average unit contribution margin, break-even sales volume, and number of units of Standard and Premium tables at break-even point. Answer: Average unit contribution margin: ($75 x 3/4) + ($325 x 1/4) = $137.50 Break-even sales volume: $18,150 (fixed costs) / $137.50 (average contribution margin) 132 With a 3:1 sales mix, at break-even, there will be 99 standard tables and 33 premium tables. Standard tables: 132 x 3/4 = 99 tables Premium tables: 132 x 1/4 = 33 tables = B) Now, suppose that due to supply chain problems, the supply of the wood used to produce the standard and premium picnic tables is limited to 5,000 pounds. Further, Midwest Furniture must produce 300 of each table to remain competitive. If the standard picnic table uses 3 pounds of wood per unit, and the premium uses 12 pounds of wood per unit, how many units of each table will Midwest Furniture produce? 1. Assume the Midwest Furniture Company sells two kinds of picnic tables, standard and premium. At a 3:1 unit sales mix in which Midwest sells three standard tables for every premium table, the following revenue and cost information is available. + Unit selling price Unit variable costs Unit contribution margin Standard Table $200 $125 $75 Premium Table $600 $ 275 $325 Fixed costs per month: $18,150 A) Assuming a 3:1 sales mix, calculate Midwest Furniture's current monthly average unit contribution margin, break-even sales volume, and number of units of Standard and Premium tables at break-even point. Answer: Average unit contribution margin: ($75 x 3/4) + ($325 x 1/4) = $137.50 Break-even sales volume: $18,150 (fixed costs) / $137.50 (average contribution margin) 132 With a 3:1 sales mix, at break-even, there will be 99 standard tables and 33 premium tables. Standard tables: 132 x 3/4 = 99 tables Premium tables: 132 x 1/4 = 33 tables = B) Now, suppose that due to supply chain problems, the supply of the wood used to produce the standard and premium picnic tables is limited to 5,000 pounds. Further, Midwest Furniture must produce 300 of each table to remain competitive. If the standard picnic table uses 3 pounds of wood per unit, and the premium uses 12 pounds of wood per unit, how many units of each table will Midwest Furniture produce?

Answer rating: 100% (QA)

SOLUTION To determine the number of units of each table that Midwest Furniture will produce we need ... View the full answer