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______________________________ E a CollegeLevel Vocabulary Unit contribution margin
$1,500 $2,400
______________
$.24 3 Approaching College Assignments:
Reading Textbooks and Following Directions 16,250 prints Multiproduct CVP Analysis
When UDevelop started, it provided only one service, print processing. After a short
time, a second service, enlargements of photos, was offered. The prices and costs of the
two follow:
Prints
Selling price. . . . . . . . . . . . . .
Variable cost . . . . . . . . . . . . .
Contribution margin. . . . . . . . Enlargements $.60
.36
__
__
$.24
__
__
__
__ $1.00
.56
_____
$ .44
_____
_____ When these two services were offered, monthly ﬁxed costs totaled $1,820.
Without some assumptions, there is an inﬁnite number of combinations of the two
services that would
cor50782_ch01_001072.indd 1 achieve a given level of proﬁt. To simplify matters, managers often lan27114_ch03_080109.indd
lan27114_ch03_080109.indd 91 ✓ Related Resources
See pages 000 to 000
of the Annotated Instructor’s
Edition for general suggestions related to the chapters
in Part One.
1 10/5/09 11:09:29 PM 10/22/09 10:34:00 PM REVISED PAGES Part II 92 Cost Analysis and Estimation 1 assume a particular product mix and compute breakeven
PA
T
or target volumesRusing either of two methods, a ﬁxed product mix or weightedaverage contribution margin, both of
which give the same result. Fixed Product Mix Using the ﬁxed product mix Orientation method, managers deﬁne a package or bundle of products
in the typical product mix and then compute the breakeven or target volume for the package. For example, suppose that the owner of UDevelop is willing to assume that
the prints and enlargements will sell in a 9:1 ratio; that is,
of every ten “units” of service sold, nine will be prints and
Preparing and Organizing Yourself
one will be an enlargement. Deﬁning X as a package of
nine prints and one enlargement, the contribution margin
from this for Success in College
package is Managers compute the breakeven or target volume of a
bundle or package of products. Prints . . . . . . . . . . . . . . . . .
Enlargements . . . . . . . . . . .
Contribution margin . . . . . . 9
1 $.24
$.44 $2.16
.44
_____
$2.60
_____
_____ Now the breakeven point is computed as follows
X Fixed costs
$1,820 Contribution margin $2.60 CHAPTERS IN PART ONE 700 packages 1 Making Yourself Successful in College
where X refers to the breakeven number of packages. This means that the sale of 700
packages of nine prints and one enlargement per package, totaling 6,300 prints and 700
enlargements, is required to break even.2 Approaching College Reading and
Developing a CollegeLevel Vocabulary WeightedAverage Contribution Margin The weightedaverage contribution
margin also requires an assumed product mix, which we continue to assume is 90 percent
3 Approaching solved by using a weightedprints and 10 percent enlargements. The problem can be College Assignments:
average contribution margin per unit. When Reading Textbooksaand Following Directions
a company assumes constant product mix,
the contribution...
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 Spring '07
 MEJIAS

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