Reference no: EM132716174
Question - International Printer Machines (IPM) builds three computer printer models: Alpha, Beta, and Gamma. Information for these three products is as follows:
Selling price per unit Variable cost per unit Expected unit sales (annual) Sales mix
Alpha $250 $80 12,000 50 percent
Beta $400 $200 6,000 40 percent
Gamma $1 500 $800 2,000 10 percent
Total 20,000 100 percent
Total annual fixed costs are $5,000,000. Assume the sales mix remains the same at all levels of sales.
Required -
a) Calculate the weighted average unit contribution margin, assuming a constant sales mix.
b) How many units of each printer must be sold to break even?
c) i) Explain what is margin of safety.
ii) Calculate in sales units the margin of safety for IPM, assuming projected sales are.
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