Weidner Company sells 22,000 units at $30 per unit. Variable costs are $24 per unit, and fixed costs are $40,000

Weidner Company sells 22,000 units at $30 per unit. Variable costs are $24 per unit, and fixed costs are $40,000. Determine (a) the contribution margin ratio, (b) the unit contribution margin, and (c) income from operations.

Answer:











a. 20% = ($30 – $24) ÷ $30, or ($660,000 – $528,000) ÷ $660,000 
b. $6 per unit = $30 – $24 
c. Sales……………………………………… $660,000 (22,000 units × $30 per unit) 
Variable costs……………………………     528,000 (22,000 units × $24 per unit) 
Contribution margin……………………  $132,000 (22,000 units × $6 per unit) 
Fixed costs………………………………      40,000 
Income from operations………………  $  92,000 

Mobility Inc. has fixed costs of $510,000. The unit selling price, variable cost per unit, and contribution margin per unit

Mobility Inc. has fixed costs of $510,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company’s two products are provided below.







Product Selling Price Variable Cost per Unit Contribution Margin per Unit
AA $150 $100 $30
BB 100 75 25

The sales mix for products AA and BB is 70% and 30%, respectively. Determine the breakeven point in units of AA and BB.

Answer:


Unit selling price of E: [($150 × 0.70) + ($100 × 0.30)]   = $135.00 
Unit variable cost of E: [($100 × 0.70) + ($75 × 0.30)] =     92.50 
Unit contribution margin of E: $  42.50 
Break-Even Sales (units) = 12,000 units = $510,000 ÷ $42.50 
Break-Even Sales (units) for AA = 12,000 units of E × 70% = 8,400 units of Product AA 
Break-Even Sales (units) for BB = 12,000 units of E × 30% = 3,600 units of Product BB