Dubashi Windows manufactures two standard size windows, J and R, in the ratio of 5:3. J has a selling price of $150 per unit and R has a selling price of $200 per unit. The variable cost of J is $75.00 and the variable cost of R is $90.00. Fixed costs are $352,500. Compute the (a) contribution margin per composite unit, (b) break-even point in composite units, (c) number of units of each product that will be sold at the break-even point.
What will be an ideal response?
(a)
Selling price of a composite unit
| 5 units of J @ $150 per unit | $750 |
| 3 units of R @ $200 per unit | 600 |
| Selling price of a composite unit | $1,350 |
| 5 units of J @ $75 per unit | $375 |
| 3 units of R @ $90 per unit | 270 |
| Variable costs of a composite unit | $645 |
| Contribution margin per composite unit | $705 |
Break-even point in composite units = $144,000 / $60 = 2,400 composite units
(b) $352,500 / $705 = 500 composite units to break-even
(c) 500 composite units = 2,500 units of product J (500 x 5) and 1,500 units of product R (500 x 3)
Business
You might also like to view...
Explain the role of partner support as a trigger for a contingency plan
What will be an ideal response?
Business
Which of the following is an advantage of financial statement analysis using percentages?
a. Percentages eliminate the effect of size. b. Percentages are easy to calculate. c. Percentages are more accurate than amounts. d. Both a and c answers are correct. e. None of the answers are correct.
Business
Dividends are the expenses of a business
Indicate whether the statement is true or false
Business
Companies with high P/E ratios tend to also have high dividend payout ratios
Indicate whether the statement is true or false.
Business