CD6 EXCEL Tutorial
CURRENT DESIGNS
Current Designs manufactures two different types of kayak, rotomolded kayaks and composite kayaks.
The following information is available for each product line.
			Rotomolded		Composite
	Sales price/unit		$950		$2,000
	Variable costs/unit		$570		$1,340
The company's fixed costs are $820,000. An analysis of the sales mix identifies that rotomolded kayaks
make up 80% of the total units sold.
Instructions
(a)	Determine the weighted-average unit contribution margin for Current Designs.
(b)	Determine the break-even points in units for Current Designs and identify how many units of each
	type of kayak will be sold at the break-even point. (Round to the nearest whole number.)
(c )	Assume that the sales mix changes, and rotomolded kayaks now make up 70% of total units sold.
	Calculate the total number of units that would need to be sold to earn a net income of $2,000,000
	and identify how many units of each type of kayak will be sold at this level of income. (Round to the
	nearest whole number.)
(d)	Assume that Current Designs will have sales of $3,000,000 with two-thirds of the sales dollars in
	rotomolded kayaks and one-third of the sales dollars in composite kayaks. Assuming $660,000 of fixed
	costs are allocated to the rotomolded kayaks and $160,000 to the composite kayaks, prepare a CVP
	income statement for each product line.
(e )	Using the information in part (d), calculate the degree of operating leverage for each product line and
	interpret your findings. (Round to two decimal places.)
(a)	Determine the weighted-average unit contribution margin for Current Designs.
			Rotomolded Kayaks		Composite Kayaks
	Sales price/unit		Value		Value
	Variable costs/unit		Value		Value
	Unit Contribution margin (UCM)		?		?
	Product mix		Value		Value
	Weighted Average UCM		?	+	?	?
(b)	Determine the break-even points in units for Current Designs and identify how many units of each
	type of kayak will be sold at the break-even point. (Round to the nearest whole number.)
	Fixed costs		Value
	Weighted Average UCM		Value
	Breakeven units		?
			Rotomolded Kayaks		Composite Kayaks
	Breakeven unit distribution		?		?
(c )	Assume that the sales mix changes, and rotomolded kayaks now make up 70% of total units sold.
	Calculate the total number of units that would need to be sold to earn a net income of $2,000,000
	and identify how many units of each type of kayak will be sold at this level of income. (Round to the
	nearest whole number.)
	Target net income in units:
			Rotomolded Kayaks		Composite Kayaks
	Sales price/unit		Value		Value
	Variable costs/unit		Value		Value
	Unit Contribution margin (UCM)		?		?
	Product mix		Value		Value
	Weighted Average UCM		?	+	?	?
	Required sales in units:
	Total fixed costs		Value		Value
	Target net income		Value		Value
	Total required sales (dollars)		?		?
	Weighted Average UCM		?		?
	Required sales in units		?		?
(d)	Assume that Current Designs will have sales of $3,000,000 with two-thirds of the sales dollars in
	rotomolded kayaks and one-third of the sales dollars in composite kayaks. Assuming $660,000 of fixed
	costs are allocated to the rotomolded kayaks and $160,000 to the composite kayaks, prepare a CVP
	income statement for each product line.
			Rotomolded Kayaks		Composite Kayaks
	Sales		Value		Value
	Variable Costs		Value		Value
	Contribution Margin		?		?
	Fixed Costs		Value		Value
	Net Income		?		?
(e )	Using the information in part (d), calculate the degree of operating leverage for each product line and
	interpret your findings. (Round to two decimal places.)
			Rotomolded Kayaks		Composite Kayaks
	Contribution Margin (a)		Value		Value
	Net Income (b)		Value		Value
	Degree of Operating Leverage (a b)		?		?