Generic Company sells two types of blenders: standard and deluxe. Data on the two blenders...
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Accounting
Generic Company sells two types of blenders: standard and deluxe. Data on the two blenders is given below.
Standard per Unit
Standard at 52,000 units
Deluxe per unit
Deluxe at 35,000 units
Total
Ratio
Sales
$80
$4,160,000
$400
$14,000,000
$18,160,000
100.00%
Variable expenses
60
3,120,000
280
9,800,000
12,920,000
71.1%
Contribution margin
$20
$1,040,000
$120
$4,200,000
$5,240,000
28.9%
Total Fixed expenses
5,500,000
Net operating income (loss)
($260,000)
Required: Show your work.
a. Calculate the overall contribution margin ratio for the company. Round percentages to one decimal place.
b. What is the company's overall break-even point in dollar sales? Round up to the nearest whole dollar.
c. If the company increases the price on the Standard product to $100 per unit with no change in the per unit variable expenses. However, the sales volume decreases to 40,000 units. What happens to the company's overall Net Operating Income?
Answer & Explanation
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