Marty, the marketing manager, would like you to assist in providing information for a marketing strategy he is proposing at the annual general meeting next month. He is focusing only on the maca-sponge and wants to know the optimal product mix. Below is an estimate of the costs of the three sizes of the maca-sponge.

		Maca-Sponge Sizes
		1.5kg	800 gram	300gram
Selling Price		$30.00	$25.00	$19.00
Costs:
	Raw materials	$10.00	$8.00	$3.00
	Direct labour	$7.00	$4.00	$2.00
	Overhead	$5.00	$4.00	$2.80
	Selling and Admin	$3.00	$2.50	$2.20

  

Each of the three products goes through the same manufacturing process which consists of mixing, spreading, cooking and then packaging ready to be sold. The time for each process, in minutes, is in the table below.

	Mixing	Spreading	Cooking	Packaging
	HOURS REQUIRED
1.5 kg	4	8	30	3
800 gram	10	3	20	2
300 gram	8	8	20	2
HOURS AVAILABLE	8,000	12,000	100,000	10,000

To assist Marty with his marketing proposal you have offered to provide him with a break-even analysis for the 3 maca-sponge sized cakes. The costs are the same (refer to the cost estimation table in question 1). Fixed costs are $525,000 and the sales mix in the same percentage allocation that you calculated in question 1.

1. Calculate the unit contribution for each product. 
2. What is the sales mix? 
3. Calculate the weighted average unit contribution margin? 
4. What is the break-even sales revenue in dollars? 
5. How many of each type of maca-sponges must be sold to earn a target profit of $350,000? Assume a constant sales mix.

Answer rating: 100% (QA)

Cal cul ate the unit contribution for each product ANS WER 1 5 kg 30 00 17 00 13 00 800 gram 25 00 1... View the full answer