International Printer Machines (IPM) builds three computer printer models: Alpha, Beta, and Gamma. Information for these three products is as follows:

Selling price per unit

Variable cost per unit Expected unit sales (annual) Sales mix

Alpha

$250

$80 12,000

50 percent

Beta

$400

$200 6,000

40 percent

Gamma

$1 500

$800 2,000

10 percent

Total

20,000

100 percent

Total annual fixed costs are $5,000,000. Assume the sales mix remains the same at all levels of sales.

Required:

a) Calculate the weighted average unit contribution margin, assuming a constant sales mix. (2 marks)

b) How many units of each printer must be sold to break even? (3 marks) c) i) Explain what is margin of safety (1 mark)

ii) Calculate in sales units the margin of safety for IPM, assuming projected sales are