Waterways Problem

# Waterways Problem - Part 3 Total Fixed Costs 94122 Sales...

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PART 1 UNIT DATA SPRINKLERS VALVES CONTROLLERS Selling price 11925000 16800000 2125000 Variable Costs 6282000 11925000 1487500 Contribution Margin 11.24 2.75 9.34 2000000 Sales Mix 0.225 0.75 0.025 Weighted-Average unit Contribution Margin 4.825 Sprinklers 2.529 Valves 2.0625 Controllers 0.2335 Breakeven Point in Units 157512.95 Part 2 Contribution Margins: Set 1: 27 3/ hour profit Set 2: 50 2.5/hour profit Best Use of Machine Hours: Spend 55% of your time on Set 1 (3/5.5) and 45% of your time on set 2 (2.5/5.5)
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Unformatted text preview: Part 3 Total Fixed Costs 94122 Sales Mix Percentage 0.025 Contribution Margin 29.34 \$117,360 Contribution Margin Ratio 29.34/42.50=.69 Breakeven Point 94122/.69=136408.7 Margin of Safety (170000-136408.7)/170000=.2 Degree of Operating Leverage 5.05 If it's revenue is increasing, their numbers are looking really good, especially their degree of operating leverage. This means that their profits will increase rapidly....
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