Pin Cushion Company produces two models of sewing basket. Information about Pin
ID: 2543580 • Letter: P
Question
Pin Cushion Company produces two models of sewing basket. Information about Pin Cushion's products is given below Product B Product A $45.000 18,200 Sales revenue Less: Variable costs Contribution margin Total units sold S60,000 26,600 $26,80033,400 2,160 1,120 Pin Cushion's fixed costs total $40,300 Required: 1. Determine Pin Cushion's weighted-average unit contribution margin and weighted average contribution margin ratio. (Round your CM per unit and weighted average CM ratio to two decimal places (i.e. .1234 should be entered as 12.34%.). Welghted-Average Unit CM Weighted-Average CM Ratio 2. Calculate Pin Cushion's break-even units and break-even sales revenue. (Round your units to the nearest whole number and sales revenue to two decimal places.) Break-Even Sales Units Units Break Even Sales Revenue 3. Calculate the number of units of each product that must be sold to break even. (Round your final answers to nearest whole number.) No. of Units Product A Units Product EB UnitsExplanation / Answer
1) Weighted average unit Contribution margin Aggregate contribution margin/Aggregate units (26800+33400)/(1120+2160) 18.35 Weighted average CM ratio Aggregate contribution margin /Aggregate sales (26800+33400)/(45000+60000) 57.33% Weighted Average Unit CM 18.35 Weighted Average CM Ration 57.33% 2) Break even units = fixed cost/contribution per unit 40300/18.35 2196.19 Break even sales revenue = fixed cost/CM ratio 40300/57.33% 70294.78 Break Even sale units 2196.19 Units Break even sales revenue 70294.78 3) product A 2196*1120/3280= 750 Product B 2196*2160/3280= 1446 No of units product A 750 units product B 1446 units 4) Target sales revenue = (fixed cost+target profit)/cm ratio (40300+66600)/57.33% 186464.33 Target sales revenue 186464.33 5) product A 1864464.33*45000/105000= 79913.28 product B 1864464.33*60000/105000= 106551.05 product A 79913.28 product B 106551.05