Mega Electronix sells television sets and DVD players. The business is divided i
ID: 2352709 • Letter: M
Question
Mega Electronix sells television sets and DVD players. The business is divided into two divisions along product lines. CVP income statements for a recent quarter's activity are presented below.TV Division DVD Division Total
Sales $600,000 $400,000 $1,000,000
Variable costs
450,000
240,000
690,000
Contribution margin
$150,000
$160,000
310,000
Fixed costs
124,000
Net income
$186,000
Determine sales mix percentage and contribution margin ratio for each division. (Round answers to 2 decimal places, e.g. .50.)
Sales Mix Percentage
TV Division
DVD Division
Contribution margin ratio
TV Division
DVD Division
Calculate the company's weighted-average contribution margin ratio. (Round answer to 2 decimal places, e.g. .50.)
Calculate the company's break-even point in dollars. (Use the rounded amount from the previous question when calculating the answer for this question.)
$
Determine the sales level in dollars for each division at the break-even point.
TV Division $
DVD Division $
Explanation / Answer
Sales Mix Percentage TV Division = 600,000/1,000,000 = .60 DVD Division = 400,000/1,000,000 = .40 Contribution margin ratio TV Division (600,000-450,000)/600,000 = .25 DVD Division (400,000-240,00)/400,000 = .40 Calculate the company's weighted-average contribution margin ratio. (Round answer to 2 decimal places, e.g. .50.) .60*.25 + .40*.40 = .31 Calculate the company's break-even point in dollars. (Use the rounded amount from the previous question when calculating the answer for this question.) 124,000/.31 = $400,000 Determine the sales level in dollars for each division at the break-even point. TV Division = 400,000*.6 = $240,000 DVD Division = 400,000*.4 = $160,000