Information regarding the products is summarized (answer attached)

Feb 3rd, 2012
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Problem 7 Music Company produces two models, P Diddy and Eminem. Information regarding the products is summarized for the month of April in the following table: P Diddy Eminem Total Number of units 600 400 1,000 Sales revenue $24,000 $12,000 $36,000 Fixed costs 6,000 5,400 11,400 Variable costs 12,600 3,600 16,200 Operating Income $ 5,400 $ 3,000 $ 8,400 Profit per unit $9.00 $7.50 A. How much is the weighted average contribution margin ratio based on sales dolalrs? B. What level of sales does Music need to earn a before tax profit of $10,000 assuming the current mix? C. If you were a salesman for Music, which product would you ‘push’ to customers to achieve the highest profit for your company if customers will each spend $2,000 and are indifferent as to which product? Show calculations and briefly justify your answer. ..............more

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