Exterior Incorporated manufactures and sells three products: Good, Better, and Best. Annual fixed costs are $3,315,000, and data about the three products follow.
$\begin{array}{|l|r|r|r|r|r|}
\hline & \underline{\text { Good }} && \text { Better } && \text { Best } \
\hline \text { Sales mix in units } & \underline{30^{\circ}} \%& & \underline{\underline{50^{\circ}} \%} && \underline{20^{\circ}}{ }^{\circ}\
\hline \text { Selling price } & \$ 250 & & \$ 350 & & \$ 500 \
\hline \text { Variable cost } & 100 & & 150 & & 250 \
\hline
\end{array}$ Required:
A. Determine the weighted-average unit contribution margin.
B. Determine the break-even volume in units for each product.
C. Determine the total number of units that Exterior Incorporated must sell in order to obtain a profit of $234,000.
D. Assume that the sales mix for Good, Better, and Best is changed to 50%, 30%, and 20%, respectively. Will the number of units required to break-even increase or decrease? Explain. Hint: Detailed calculations are not needed to obtain the proper solution.

Question

Exterior Incorporated manufactures and sells three products: Good, Better, and Best. Annual fixed costs are $3,315,000, and data about the three products follow. 
$\begin{array}{|l|r|r|r|r|r|}
\hline & \underline{\text { Good }} && \text { Better } && \text { Best } \
\hline \text { Sales mix in units } & \underline{30^{\circ}} \%& & \underline{\underline{50^{\circ}} \%} && \underline{20^{\circ}}{ }^{\circ}\
\hline \text { Selling price } & \$ 250 & & \$ 350 & & \$ 500 \
\hline \text { Variable cost } & 100 & & 150 & & 250 \
\hline
\end{array}$ Required:
A. Determine the weighted-average unit contribution margin.
B. Determine the break-even volume in units for each product.
C. Determine the total number of units that Exterior Incorporated must sell in order to obtain a profit of $234,000.
D. Assume that the sales mix for Good, Better, and Best is changed to 50%, 30%, and 20%, respectively. Will the number of units required to break-even increase or decrease? Explain. Hint: Detailed calculations are not needed to obtain the proper solution.

Quizplus · Accepted Answer

The Answer of Exterior Incorporated manufactures and sells three products: Good, Better, and Best. Annual fixed costs are $3,315,000, and data about the three products follow. 
$\begin{array}{|l|r|r|r|r|r|}
\hline & \underline{\text { Good }} && \text { Better } && \text { Best } \
\hline \text { Sales mix in units } & \underline{30^{\circ}} \%& & \underline{\underline{50^{\circ}} \%} && \underline{20^{\circ}}{ }^{\circ}\
\hline \text { Selling price } & \$ 250 & & \$ 350 & & \$ 500 \
\hline \text { Variable cost } & 100 & & 150 & & 250 \
\hline
\end{array}$ Required:
A. Determine the weighted-average unit contribution margin.
B. Determine the break-even volume in units for each product.
C. Determine the total number of units that Exterior Incorporated must sell in order to obtain a profit of $234,000.
D. Assume that the sales mix for Good, Better, and Best is changed to 50%, 30%, and 20%, respectively. Will the number of units required to break-even increase or decrease? Explain. Hint: Detailed calculations are not needed to obtain the proper solution.

Exterior Incorporated Manufactures and Sells Three Products: Good, Better, and Best