Question

Juniper Corp. makes three models of insulated thermos. Juniper has $306,000 in total revenue and total variable costs of $192,780. Its sales mix is given below: Percentage of total sales Thermos A 30 % Thermos B 48 Thermos C 22 Required: 1. Calculate the (overall) weighted-average contribution margin ratio. 2. Determine the total sales revenue Juniper needs to break even if fixed costs are $73,075. 3. Determine the total sales revenue needed to generate a profit of $78,070. 4. Determine the sales revenue from each product needed to generate a profit of $78,070.

Answer 1

Follows are the solution to this question:

Step-by-step explanation:

In Option 1:

`\to CM \ ratio = ((Sales - variable\ cost))/(variable\ cost)`

`= ((306,000 - 192,780))/(306,000)\\\\= (113,220)/(306,000)\\\\= 0.37 \%`

In Option 2: .

`\to BEP = (Total \ fixed \ cost)/(CM \ ratio)`

`= (73,075)/(0.37)\\\\=\$ \ 197500`

In Option 3:

`\to Required \ sales = ((73,075+ 78,070))/(0.37)`

`=(151145)/(0.37)\\\\=408500`

In Option 4:

`\to Sales A = 408500 * (30)/(100) = 1361666.67\\\\\to Sales B = 408500* (48)/(100) = 851041.667\\\\\to Sales C = 408500* (22)/(100) = 1856818.18\\\\`