Reference no: EM132667222

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

                         Selling price per unit        Variable cost per unit         Expected unit sales (annual)           Sales mix
Alpha                               $250                          $80                                  12,000                                    50 percent
Beta                                  $400                           $200                                6,000                                     40 percent
Gamma                                $1 500                       $800                                   2,000                                    10 percent
Total                                    20,000                                                                                                      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