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Hobby Shop Incorporated produces three different models with the following annual data (this is the...

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Accounting

Hobby Shop Incorporated produces three different models with the following annual data (this is the base case) Plane Car Boat Total Selling price per unit 20 14 24 Variable cost per unit 5 7 8 Expected unit sales 30,000 50,000 20,000 100,000 Sales mix % 30% 50% 20% 100% Fixed costs 650,000 Assume the sales mix remains the same at all levels of sales except for requirements j

e Calculate the weighted average contribution margin ratio.

f Find the break-even point in sales dollars.

g What amount of sales dollars is required to earn an annual profit of $400,000?

j Assume the company has a limited number of labor hours available in production, and management would like to make efficient use of these labor hours. The Plane product requires 4 labor hours per unit, the Car product requires 3 labor hours per unit, and the Boat product requires 5 hours per unit. The company sells everything it produces. Based on this information, calculate the contribution margin per labor hour for each model (round to the nearest cent), and determine the top two models the company would prefer to sell to maximize overall company profit

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