Problem 2 (30 Points) LO2

This is where the sales mix is used to determine a weighted average contribution margin [WACM]. The WACM is the contribution margin after weighting the unit contribution margins by its relative sales mix. The calculation of the WACM follows. Sales mix, along with the contribution margin per unit, is used to calculate the WACM for Fajar Plantation Pty, Ltd

Soaps Candles Detergents TOTAL

Annual volume in units 60,000 25,000 15,000

Problem 2 (30 Points) LO2

This is where the sales mix is used to determine a weighted average contribution margin [WACM]. The WACM is the contribution margin after weighting the unit contribution margins by its relative sales mix. The calculation of the WACM follows. Sales mix, along with the contribution margin per unit, is used to calculate the WACM for Fajar Plantation Pty, Ltd

Soaps Candles Detergents TOTAL

Annual volume in units 60,000 25,000 15,000

Selling price per unit $ 40 $ 50 $ 80

Variable cost per unit $ 30 $ 30 $ 44 Contribution margin $ 10 $ 20 $ 36

Fixed Cost in total $328,000

Sales mix ? ? ?

WACM ? ? ? ?

Required:

1. Explain what benefits can be obtained by companies that have to calculate BEP on multiple products? (5 points)
2. Calculate the sales mix composition for Soaps, Candles, and Detergents! (5 points)
3. Calculate the WACM composition for Soaps, Candles, and Detergents! (5 points)
4. Calculate Break Even Point [BEP] multi products in unit, rounded nearest and gove your explanation! (5 points)
5. Prepare the statement profit or loss for Fajar Plantation Pty, Ltd showing the contribution to fixed costs by each product at break-even using each products sales requirements for break-even and interpret the result! (5 points)
6. Are there any disadvantages that we can find in the calculation of BEP with multi-products? if there are, explain clearly! (5 points)