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Calculate the weighted average unit contribution margin

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Question - 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 -

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 25,000 units?

Reference no: EM132717114

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