CALC LATOR PRITER VERSION BACK NEXT Pharoah Inc sells two ty

CALC LATOR PRITER VERSION BACK NEXT Pharoah, Inc, sells two types of water pitchers, plastic and glass. Plastic pitchers coot the company $37 and are sold are sold for $67. All other costs are fixed at $2 in the coming year s to be How many pitchers of each type must be sold to break even in the coming year? Plastic pitchers Glass pitchers (Use contribution margin per unit to calculate breakeven units.) LINK TO TEXT LINK TO TEXT LINK TO VIDEO LINK TO VIDEO catalog from a new supplier that is offering blastic pitchers for $35. what would be the new contributon margin per unit if managers switched to the new supplier? Plastic pitchers Glass pitchers Contribution margin per unit What would be the new breakeven point if managers switched to the new supplier? ( Round answers to 0 decimal places, e.g. 25,000.) Plastic pitchers Glass pitchers Breakeven in Units

Solution

1) Break even point = Total fixed expenses / ( Weighted average selling price - weighted average variable expenses)

Where weighted average selling price = (Sale price of product A × Sales percentage of product A) + (Sale price of product B × Sale percentage of product B)

  weighted average variable expenses = (Variable expenses of product A × Sales percentage of product A) + (Variable expenses of product B × Variable expenses of product B)

Here Sales % of Plastic pitchers = [36,680 / (36,680 + 110,040)] * 100

=25%

Sales % of Glass pitchers = (100 - 25)%

= 75%

Weighted average selling price = (52 * 25%) + ( 67 * 75%)

= $63.25

Weighted average variable expenses = (37 * 25%) + (46 * 75%)

= $43.75

So, Break even point = 2,574,936 / (63.25 - 43.75)

= 2,574,936 / 19.5

= 132,048 units

Plastic pitchers must be sold = 132,048 * 25%

= 33,012 units Ans.

Glass pitchers must be sold = 132,048 * 75%

= 99,036 Ans.

2) Contribution margin per unit of Plastic pitchers = Unit sale price - Variable cost per unit

= 52 - 35

= $17 Ans.

Contribution margin per unit of Glass pitchers = Unit sale price - Variable cost per unit

= 67 - 46

= $21 Ans.

3) New Break even point = Total fixed expenses / ( Weighted average selling price - weighted average variable expenses)

Here Weighted average selling price = (52 * 25%) + (67 * 75%)

= $63.25

Weighted average variable expenses = (35 * 25%) + (46 * 75%)

= $43.25

So, Break even point = 2,574,936 / (63.25 - 43.25)

= 2,574,936 / 20

= 128,746.8 units

Plastic pitchers must be sold = 128,746.8 * 25%

= 32,186.7 units Ans.

Glass pitchers must be sold = 128,746.8 * 75%

= 96,560.1 Ans.