Reference no: EM132572239

Hi-Tech Incorporated produces two different products with the following monthly data:

                                          Cell                  GPS               Total

Selling price per unit       100                  400

Variable cost per unit        40                   240

Expected unit sales          21,000           9,000              30,000

Sales mix                   70%                 30%                   100%

Fixed costs                                                          $ 1,800,000

Assume the sales mix remains the same at all levels of sales.

Required:

Question a. Calculate the weighted average contribution margin per unit.

If we look at this question, we have to figure the average margin by, margin per unit multiplied by the sale mix of the cell, plus, contribution margin per unit of GPS multiplied by the sales mix of GPS (Heisinger & Hoyle, 2012). That will give us the answer of:

(100 - 40) x 70% + (400 - 240) x 30% = 90 Weighted Average Contribution Margin per unit

Question b. How many units in total must be sold to break even?

The breakeven is found by, fixed cost divided with the weighted average contribution (Heisinger & Hoyle, 2012). Which will look like this:

1,800,000/90 = 20,000 Totals Break Margin

Question c. How many units of each product must be sold to break even?

Question d. How many units in total must be sold to earn a monthly profit of $180,000?

Question e. How many units of each product must be sold to earn a monthly profit of $180,000?