Reference no: EM132666873

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:

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?