PA6-6 (Algo) Multiproduct CVP, Analyzing Break-Even Point, Target Profit, Degree of
Operating Leverage [LO 6-5, 6-6]
Pin Cushion Company produces two models of sewing basket. Information about Pin Cushion's products is
given below:
Product A
Product B
Sales revenue
$ 41.000
$ 56,000
Less: Variable costs
16,600
25,000
Contribution margin
$ 24,400
$ 31,000
Total units sold
1,040
2,080
Pin Cushion's fixed costs total $39,100.
Required:
1. Determine Pin Cushion's weighted-average unit contribution margin and weighted-average contribution
margin ratio.
2. Calculate Pin Cushion's break-even units and break-even sales revenue.
3. Calculate the number of units of each product that must be sold to break even.
4. Calculate the total sales necessary for Pin Cushion to earn a profit of $65,800.
5. Calculate the sales revenue generated from each product line if Pin Cushion earns its target profit of
$65,800.
6. Using the original information, calculate Pin Cushion's degree of operating leverage.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3 Required 4 Required 5 Required 6
Determine Pin Cushion's weighted-average unit contribution margin and weighted-average contribution margin ratio
Note: Round your intermediate calculations to 2 decimal places. Round your CM per unit and weighted average CM
decimal places (i.e. 0.1234 should be entered as 12.34%.
Weighted-Average Unit CM
$ 17.76
Weighted-Average CM Ratio
57.11%
< Required 1
Required 2 >
Required 1 Required 2 Required 3
Required 4 Required 5 Required 6
Calculate Pin Cushion's break-even units and break-even sales revenue.
Note: Round your units to the nearest whole number and sales revenue to 2 decimal places.
Break-Even Sales Units
Break Even Sales Revenue
$
2,202 Sewing Baskets
39,100.00
Required 1 Required 2
Required 3 Required 4
Required 5
Required 6
Calculate the number of units of each product that must be sold to break even.
Note: Round your answers to the nearest whole number.
Mumber of Units
Product A
Product B
932 Sewing Baskets
1,273 Sewing Baskets
Required 1 Required 2 Required 3 Required 4
Required 5 Required 6
Calculate the total sales necessary for Pin Cushion to earn a profit of $65,800.
Note: Round your intermediate calculations to 2 decimal pla places. Round your answer to 2 decimal places.
Target Sales Revenue
S
183,796.77
Required 1 Required 2 Required 3 Required 4
Required 5 Required 6
Calculate the sales revenue generated from each product line if Pin Cushion earns its target profit of $65,800.
Note: Round your intermediate calculations to 2 decimal places. Round your answers to 2 decimal places.
Sales Revenue
Product A
$
77,687.30
Product B
S
106,109.48
Required 1 Required 2 Required 3 Required 4 Required 5 Required 6
Using the original information, calculate Pin Cushion's degree of operating leverage.
Note: Round your answer to 2 decimal places.
Degree of Operating Leverage
3.40
