When a company sells multiple products the breakeven

  • Montgomery College
  • ACCT ac 202
  • Notes
  • AgentStarKomodoDragon8388
  • 6
  • 92% (12) 11 out of 12 people found this document helpful

This preview shows page 4 - 6 out of 6 pages.

When a company sells multiple products, the breakeven point in sales dollars is computed by: dividing the total fixed costs by the weighted average contribution margin ratio. dividing the total fixed costs by the weighted average contribution margin. multiplying the breakeven point in units times the average sales price. dividing the total fixed costs by the average contribution margin.
The degree of operating leverage can be computed as:
contribution margin ratio times the sales mix percentage. contribution margin divided by net income. net income divided by the sales mix percentage. Which of the following is a period cost under variable costing?
Variable overhead Fixed overhead Net income under variable costing will be higher than net income under absorption costing when:
In the month of April, Carly's Carwash provided 3,000 car washes at an average price of $25. Fixed costs are $9,300 and variable costs are 85% of sales. Compute the margin of safety ratio. 2.60 % 20.97 % 15.00% 17.33% Correct! Breakeven sales are 9,300 - (1 - .85) or $62,000. The margin of safety is $75,000 - $62,000 or $13,000. The margin of safety ratio is $13,000 ÷ $75,000 or 17.33%.
Linburgh Inc manufactures model airplanes and repair kits. The planes account for 80% of the sales mix, and the kits the remainder. The variable cost ratio for the planes is 85% and 70% for the kits. Fixed costs are $99,000. Compute the breakeven point in sales dollars.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture