Accessories Ltd use to make and sell only one type of smart watch but in order to

survive in a competitive market the company has recently expanded its line and added

another two products. Currently the company has three smart watches, the "Stylish"

which sells for $200, the "Cloud" which sells for $150 and the "MP9" which sells for

$180. Given the company has only just branched out with multiple products it

requires the assistance of the Management Accountant to perform some CVP analysis.

Additional Information:

Stylish

Cloud

MP9

Sales (units)

30,000

45,000

37,500

Direct Labour

$10.00

$22.00

$41.00

Variable Selling Expenses

$15.00

$13.00

$10.00

Electrical components

$5.00

$5.00

$5.00

Based on the increase in demand, forecasted sales volume for the "MP9" is expected

to double whilst the sales volume of the other two units will remain the same. The

company recently received a letter from their suppliers informing them that the direct

materials which are used for making the "Stylish" will increase by $10 per unit and

the variable selling of the MP9 will increase by $8. Fixed cost for the company are

said to be $246,000

Answers to all questions are required: (where necessary round off answer to 2

decimal places)

a)

Calculate the sales mix for the three products.

b)

Calculate the weighted average contribution margin (WACM) for the

company.

c)

Calculate the number of units for each product line which need to be sold in

order for the company to break even.

d)

Explain THREE limitations that Accessories Ltd may encounter by using Cost

Volume Profit Analysis (CVP)