How many units of each printer must be sold to break even

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Reference no: EM132665765

International Printer Machines (IPM) builds three computer printer models: Alpha, Beta, and Gamma. Information for these three products is as follows:

                                                    Alpha                Beta               Gamma

Total 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:

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

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

Problem 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: EM132665765

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