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Multiple-Product Break-even, Break-Even SalesRevenue

Cherry Blossom Products Inc. produces and sells yoga-trainingproducts: how-to DVDs and a basic equipment set (blocks, strap, andsmall pillows). Last year, Cherry Blossom Products sold 13,500 DVDsand 4,500 equipment sets. Information on the two products is asfollows:

	DVDs	Equipment Sets
Price	$8	$25
Variable cost per unit	4	15

Total fixed cost is $77,270.

Suppose that in the coming year, the company plans to produce anextra-thick yoga mat for sale to health clubs. The companyestimates that 9,000 mats can be sold at a price of $17 and avariable cost per unit of $11. Total fixed cost must be increasedby $25,750 (making total fixed cost $103,020). Assume thatanticipated sales of the other products, as well as their pricesand variable costs, remain the same.

Part 1: Sales Mix Instructions and Part 2: Break-Even

1. What is the sales mix of DVDs, equipmentsets, and yoga mats?
3:1:2

2. Compute the break-even quantity of eachproduct.

Break-even DVDs	units
Break-even equipment sets	units
Break-even yoga mats	units

3a. Prepare an income statement for CherryBlossom Products for the coming year. Cherry Blossom Products Inc. Income Statement For the Coming Year $ $ $

3b. What is the overall contribution marginratio? Use the contribution margin ratio to compute overallbreak-even sales revenue. (Note: Round the contributionmargin ratio to the nearest whole percent; round the break-evensales revenue to the nearest dollar.)

Overall contribution margin ratio		%
Overall break-even sales revenue	$

4. Compute the margin of safety for the comingyear in sales dollars.
$