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Sales Analysis and Profit Optimization

This document contains information about sales, costs, and net income for three scenarios (A, B, C) with the highest net income being scenario A. It also includes calculations to find the break-even point in units (3261 units) and pricing information ($65 price per unit, $42 variable cost per unit). It then provides financial information for a tablet and MP3 player division, including their sales mix, contribution margin ratios, and the weighted average contribution margin ratio of 32%. Finally, it lists price, variable costs, and machine hours required for three products. It determines the contribution margin per machine hour for each, and calculates the income if 30,000 additional machine hours were used for each product

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44 views2 pages

Sales Analysis and Profit Optimization

This document contains information about sales, costs, and net income for three scenarios (A, B, C) with the highest net income being scenario A. It also includes calculations to find the break-even point in units (3261 units) and pricing information ($65 price per unit, $42 variable cost per unit). It then provides financial information for a tablet and MP3 player division, including their sales mix, contribution margin ratios, and the weighted average contribution margin ratio of 32%. Finally, it lists price, variable costs, and machine hours required for three products. It determines the contribution margin per machine hour for each, and calculates the income if 30,000 additional machine hours were used for each product

Uploaded by

Seventeen’s Carat
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd

E6.

3 Sales ###
Unit 5000
Variable Cost ###
Fixed Cost $75,000
Beginning Net Inco $40,000
A.
Sales: ###
Net Income: $72,500
B.
Variable Cost: ###
Net Income: $61,500
C.
Fixed Cost: $60,000
Net Income: $55,000

Action with highest net income: A

Price per unit $65 Q


VC per unit $42 Q
BEP
65Q-42Q-75000 =0
23Q-75000 =0
75000 =23Q
3261 =Q

E6.10 Tablet MP3 PlayeTotal


Sales ### $400,000 ###
Variable costs 420,000 260,000 680,000
Contribution margin ### $140,000 $320,000
Fixed costs   $120,000
Net income   $200,000

a Sales mix percentage


Tablet division 60%
MP3 Player divison 40%

contribution margin ratio


Tablet division 30%
MP3 Player divison 35%

b weighted-average contribution margin ra32%


c BEP in sales dollars ###

d Sales level at the BEP


Tablet division ###
MP3 Player divison ###

E6.11 Product
A B C
Selling price $9 $12 $15
Variable costs and
$3 $10 $12
expenses
Machine hours to
2 1 2
produce

a. contribution margin per unit of limited resource


Product A $3
Product B $2
Product C $2

b. Assuming additional 30000 machine hours are available


Product A $9,000
Product B $6,000
Product C $4,500
Product A should be manufactured

c.1 If additional hours are divided equally,


Additional hours for each pro 1000 hours
Product A $3,000
Product B $2,000
Product C $1,500
TOTAL $6,500
c.2 If additional hours are allocated entirely to Product A
Product A $9,000
Product B $0
Product C $0
TOTAL $9,000

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