Solved

A Company Sells Three Products as Shown Below These Three Products All Always Sold in Fixed Proportions

Question 13

Essay

A company sells three products as shown below:  Product X Product Y Product Z Total  Units 60,000140,00050,000250,000 Sales $90,000$150,000$60,000$300,000 Variable Costs $63,000$93,000$19,000$175,000 Contribution  Margin $125,000 Fixed Costs $100,000\begin{array} { | l | r | r | r | r | } \hline & \text { Product X} & \text { Product Y} & \text { Product Z} & \text { Total } \\\hline \text { Units } & 60,000 & 140,000 & 50,000 & 250,000 \\\hline \text { Sales } & \$ 90,000 & \$ 150,000 & \$ 60,000 & \$ 300,000 \\\hline \text { Variable Costs } & \$ 63,000 & \$ 93,000 & \$ 19,000 & \$ 175,000 \\\hline \begin{array} { l } \text { Contribution } \\\text { Margin }\end{array} & & & & \$ 125,000 \\\hline \text { Fixed Costs } & & & &\$100,000 \\\hline\end{array} These three products all always sold in fixed proportions. In other words, Product X always accounts for 24% of total sales (60,000/250,000), Product Y always accounts for 56% of total sales (140,000/250,000), and Product Z always accounts for 20% of total sales (50,000/250,000).
Required:
a. How many units of each product need to be sold to break-even?
b. How many units must of each product must be sold if the company wants to have a profit of $50,000?

Correct Answer:

verifed

Verified

a. Weighted Contribution Margin per Unit...

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents