Instructions

Multiple$-$Product Break$-$even, Break$-$Even Sales Revenue

Cherry Blossom Products Inc. produces and sells yoga$-$training products: how$-$to DVDs and a basic equipment set $($blocks$,$ strap, and small pillows$).$ Last year, Cherry Blossom Products sold $13,500$ DVDs and $4,500$ equipment sets. Information on the two products is as follows:

DVDs Equipment Sets

Price $$8$ $$25$

Variable cost per unit $15$

Total fixed cost is $$87,900.$

Suppose that in the coming year, the company plans to produce an extra$-$thick yoga mat for sale to health clubs. The company estimates that $9,000$ mats can be sold at a price of $$18$ and a variable cost per unit of $$9.$ Total fixed cost must be increased by $$29,300($making total fixed cost $$117,200).$ Assume that anticipated sales of the other Part $1$: Sales Mix Instructions and Part $2$: Break$-$Even

$1.$ What is the sales mix of DVDs$,$ equipment sets, and yoga mats?

$3$:$1$:$2$

$2.$ Compute the break$-$even quantity of each product.

Break$-$even DVDs units

Break$-$even equipment sets units

Break$-$even yoga mats units

Part $3$a: Income Statement

$3$a$.$ Prepare an income statement for Cherry

Blossom Products for the coming year.

Cherry Blossom Products Inc.

Income Statement For the Coming Year

Sales

Total variable cost

Contribution margin

Total fixed cost

Operating income

Part $3$b: Contribution Margin Ratio and Part $4$: Margin of Safety

$3$b$.$ What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break$-$even sales revenue. $($Note: Round the contribution margin ratio to the nearest whole percent; round the break$-$even sales revenue to the nearest dollar.$)$

Overall contribution margin ratio $\%$

Overall break$-$even sales revenue

$4.$ Compute the margin of safety for the coming year in sales dollars.Instructions

Multiple$-$Product Break$-$even, Break$-$Even Sales Revenue

Cherry Blossom Products Inc. produces and sells yoga$-$training products: how$-$to DVDs and a basic equipment set $($blocks$,$ strap,

and small pillows$).$ Last year, Cherry Blossom Products sold $13,500$ DVDs and $4,500$ equipment sets. Information on the two

products is as follows:

Total fixed cost is $$87,900.$

Suppose that in the coming year, the company plans to produce an extra$-$thick yoga mat for sale to health clubs. The company

estimates that $9,000$ mats can be sold at a price of $$18$ and a variable cost per unit of $$9.$ Total fixed cost must be increased by

$$29,300($making total fixed cost $$117,200).$ Assume that anticipated sales of the other products, as well as their prices and

variable costs, remain the same.

Part $1$: Sales Mix Instructions and Part $2$: Break$-$Even

What is the sales mix of DVDs$,$ equipment sets, and yoga mats?

Compute the break$-$even quantity of each product.

Break$-$even DVDs

Break$-$even equipment sets

Break$-$even yoga mats

Part $3$a: Income Statement

$3$a$.$ Prepare an income statement for Cherry Blossom

Products for the coming year.

Cherry Blossom Products Inc.

Income Statement

For the Coming Year

Part $3$b: Contribution Margin Ratio and Part $4$: Margin of Safety

$3$b$.$ What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break$-$even sales

revenue. $($Note: Round the contribution margin ratio to the nearest whole percent; round the break$-$even sales revenue to the

nearest dollar.$)$

Overall contribution margin ratio

Overall break$-$even sales revenue

units

units

units

Compute the margin of safety for the coming year in sales dollars.