Question 5 Smarty Inc. Ltd produces two different products with the following monthly data: Selling price...

 

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Question 5 Smarty Inc. Ltd produces two different products with the following monthly data: Selling price per unit Variable cost per unit Expected unit sales. Sales mix Fixed costs P1 $100 $ 60 21,000 60 percent P2 $12 $ 3 14,000 40 percent (5 marks) Assume the sales mix remains the same at all levels of sales. Total 35,000 100 percent $750,000 Required: a) Prepare a contribution margin income statement for the month. (3 marks) b) If the sales mix shifts more toward the P1 product than the P2 product, would the break-even point in units increase or decrease? Explain. (Detail calculations are not necessary but may be helpful in confirming your answer.) (2 marks) Question 5 Smarty Inc. Ltd produces two different products with the following monthly data: Selling price per unit Variable cost per unit Expected unit sales. Sales mix Fixed costs P1 $100 $ 60 21,000 60 percent P2 $12 $ 3 14,000 40 percent (5 marks) Assume the sales mix remains the same at all levels of sales. Total 35,000 100 percent $750,000 Required: a) Prepare a contribution margin income statement for the month. (3 marks) b) If the sales mix shifts more toward the P1 product than the P2 product, would the break-even point in units increase or decrease? Explain. (Detail calculations are not necessary but may be helpful in confirming your answer.) (2 marks)

Answer rating: 100% (QA)

a CONTRIBUTION MARGIN INCOME STATEMENT P1 P2 TOTAL Sales 2100000 1260000 3360000 Less variable cost ... View the full answer