Find how many units of printer must be sold to break even

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Reference no: EM132692408

International Printer Machines (IPM) builds three computer printer models:

                                           Alpha                   Beta                 Gamma            

Selling price per unit         $250              $400                   $1 500

Variable cost per unit          $80                 $200                 $800

Expected unit sales (annual) 12,000            6,000               2,000              20,000

Sales mix                      50 percent         40 percent           10 percent            100 percent

Total annual fixed costs are $5,000,000. Assume the sales mix remains the same at all levels of sales.

Required:

Question a) Calculate the weighted average unit contribution margin, assuming a constant sales mix.

Question b) How many units of each printer must be sold to break even?

Question c) i) Explain what is margin of safety

ii) Calculate in sales units the margin of safety for IPM, assuming projected sales are 25,000 units?

Reference no: EM132692408

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