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Current Designs manufactures two different types of kayaks, rotomolded kayaks and composite kayaks. The following information is available for each product line.

		Rotomolded		Composite
Sales price/unit		$800		$2,000
Variable costs/unit		$480		$1,340

The companys fixed costs are $655,720. An analysis of the sales mix identifies that rotomolded kayaks make up 80% of the total units sold.

(a)

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Determine the weighted-average unit contribution margin for Current Designs.

Weighted-average unit contribution margin

$

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Attempts: 1 of 2 used

(b)

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Your answer is correct.

Determine the break-even point in units for Current Designs and identify how many units of each type of kayak will be sold at the break-even point.

Break-even sales

units

		Rotomolded Kayaks			Composite Kayaks
Break-even sales distribution			units			units

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Attempts: 1 of 2 used

(c)

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Your answer is correct.

Assume that the sales mix changes, and rotomolded kayaks now make up 70% of total units sold. Calculate the total number of units that would need to be sold to earn a net income of $1,601,980 and identify how many units of each type of kayak will be sold at this level of income.

Required sales

units

		Rotomolded Kayaks			Composite Kayaks
Break-even sales distribution			units			units

eTextbook and Media

Attempts: 1 of 2 used

(d)

Assume that Current Designs will have sales of $2,400,000 with two-thirds of the sales dollars in rotomolded kayaks and one-third of the sales dollars in composite kayaks. Assuming $528,000 of fixed costs are allocated to the rotomolded kayaks and $127,720 to the composite kayaks, prepare a CVP income statement for each product line.

		Rotomolded Kayaks		Composite Kayaks
Administrative ExpensesContribution MarginFixed CostsGross ProfitNet Income / (Loss)SalesSelling ExpensesVariable Costs		$		$
Administrative ExpensesContribution MarginFixed CostsGross ProfitNet Income / (Loss)SalesSelling ExpensesVariable Costs
Administrative ExpensesContribution MarginFixed CostsGross ProfitNet Income / (Loss)SalesSelling ExpensesVariable Costs
Administrative ExpensesContribution MarginFixed CostsGross ProfitNet Income / (Loss)SalesSelling ExpensesVariable Costs
Administrative ExpensesContribution MarginFixed CostsGross ProfitNet Income / (Loss)SalesSelling ExpensesVariable Costs		$		$

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