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Description

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

GPS

Selling price per unit

100

400

Variable cost per unit

40

240

21,000

9,000

30,000

70%

30%

100%

Expected unit sales Sales mix Fixed costs

Total

$ 1,800,000

Assume the sales mix remains the same at all levels of sales. Required: a. Calculate the weighted average contribution margin per unit. b. How many units in total must be sold to break even? c. How many units of each product must be sold to break even? d. How many units in total must be sold to earn a monthly profit of $180,000? e. How many units of each product must be sold to earn a monthly profit of $180,000? Answers a. weighted average contribution margin per unit= [ Contribution margin for cell X sales mix for cell ] + [ Contribution margin for GPS X sales mix for GPS ] = 60 X70% + 160X30% = 90 b. Total fixed cost + target profit / weighted average contribution margin per unit = 1,800,000 +0 /90 = 20,000 c. For cell: 70% X 20,000= 14,000 For GPS: 30% X 20,000= 6,000 d. Target profits in unit= Total fixed cost + Target Profit / weighted average contribution margin =1,800,000 + 180,000 / 90 = 22,000 e. For cell: 70% X 22,000= 15,400 For GPS: 30% X 22,000= 6,600...