why did she use Weighted average selling price in her calculation.?

Fact Pattern: Catfur Company has fixed costs of $300,000. It produces two products, X and Y. Product X has a variable cost percentage equal to 60% of its $10 per unit selling price. Product Y has a variable cost percentage equal to 70% of its $30 selling price. For the past several years, unit sales of Product X were 40% of total unit sales. That ratio is not expected to change.

Question:25

Assume that Catfur Company achieved its planned breakeven level of sales in dollars, but the mix of products sold was one-to-one. All actual costs and unit selling prices equaled budgeted amounts. What is the impact on profitability?

A.

The company earned a profit.

Answer (A) iscorrect. The expected sales mix is 40% for Product X and 60% for Product Y. Weighted-average UCM equals $7 {[$10 – ($10 × 60%)] × 40%} + {[$30 – ($30 × 70%)] × 60%}. Weighted-average selling price equals $22 [($10 × 40%) + ($30 × 60%)]. The weighted-average CMR therefore equals 0.3181818 ($7 ÷ $22), and the breakeven point in sales dollars equals $942,857 ($300,000 ÷ 0.3181818). If actual sales were 50% Product X and 50% Product Y, weighted-average UCM would equal $6.50 {[$10 – ($10 × 60%)] × 50%} + {[$30 – ($30 × 70%)] × 50%}. Weighted-average selling price would equal $20 [($10 × 50%) + ($30 × 50%)]. The weighted-average CMR would therefore equal 0.325 ($6.50 ÷ $20), and the breakeven point in sales dollars would equal $923,077 ($300,000 ÷ 0.325). Given that sales reached the budgeted breakeven point of $942,857, Catfur must have made a profit of $19,780 ($942,857 – $923,077).

B.

Cannot be determined from the information given.

C.

The company sustained a loss.

D.

The company is operating at the breakeven point.

------------------------------ Tayba Al-Mehdar Analyst Khobar Saudi Arabia ------------------------------

Original Message: Sent: 10-19-2020 06:13 AM From: Tayba Al-Mehdar Subject: CMA part 2 - cvp

why did she use Weighted average selling price in her calculation.?

Fact Pattern: Catfur Company has fixed costs of $300,000. It produces two products, X and Y. Product X has a variable cost percentage equal to 60% of its $10 per unit selling price. Product Y has a variable cost percentage equal to 70% of its $30 selling price. For the past several years, unit sales of Product X were 40% of total unit sales. That ratio is not expected to change.

Question:25

Assume that Catfur Company achieved its planned breakeven level of sales in dollars, but the mix of products sold was one-to-one. All actual costs and unit selling prices equaled budgeted amounts. What is the impact on profitability?

A.

The company earned a profit.

Answer (A) iscorrect. The expected sales mix is 40% for Product X and 60% for Product Y. Weighted-average UCM equals $7 {[$10 – ($10 × 60%)] × 40%} + {[$30 – ($30 × 70%)] × 60%}. Weighted-average selling price equals $22 [($10 × 40%) + ($30 × 60%)]. The weighted-average CMR therefore equals 0.3181818 ($7 ÷ $22), and the breakeven point in sales dollars equals $942,857 ($300,000 ÷ 0.3181818). If actual sales were 50% Product X and 50% Product Y, weighted-average UCM would equal $6.50 {[$10 – ($10 × 60%)] × 50%} + {[$30 – ($30 × 70%)] × 50%}. Weighted-average selling price would equal $20 [($10 × 50%) + ($30 × 50%)]. The weighted-average CMR would therefore equal 0.325 ($6.50 ÷ $20), and the breakeven point in sales dollars would equal $923,077 ($300,000 ÷ 0.325). Given that sales reached the budgeted breakeven point of $942,857, Catfur must have made a profit of $19,780 ($942,857 – $923,077).

B.

Cannot be determined from the information given.

C.

The company sustained a loss.

D.

The company is operating at the breakeven point.

------------------------------ Tayba Al-Mehdar Analyst Khobar Saudi Arabia ------------------------------

Question: 19 A company sells two products with the following results for the year just ended. Product 1 Product 2 Sales $12,000,000 $3,000,000 Variable costs 4,800,000 1,500,000 Fixed costs 5,400,000 400,000 Assuming the product mix and the sales mix remain the same, the company's breakeven point in sales dollars is A. $12,100,000 B. $13,810,000 C. $10,000,000 D. $9,800,00

------------------------------ Govind Jha Accountant Ulhasnagar 3 MH India ------------------------------

Original Message: Sent: 10-20-2020 07:50 AM From: Sanjana M Subject: CMA part 2 - cvp

Hi Tabya,

For multiple products, the weighted average Selling price would be used.

------------------------------ Sanjana

Original Message: Sent: 10-19-2020 06:13 AM From: Tayba Al-Mehdar Subject: CMA part 2 - cvp

why did she use Weighted average selling price in her calculation.?

Fact Pattern: Catfur Company has fixed costs of $300,000. It produces two products, X and Y. Product X has a variable cost percentage equal to 60% of its $10 per unit selling price. Product Y has a variable cost percentage equal to 70% of its $30 selling price. For the past several years, unit sales of Product X were 40% of total unit sales. That ratio is not expected to change.

Question:25

Assume that Catfur Company achieved its planned breakeven level of sales in dollars, but the mix of products sold was one-to-one. All actual costs and unit selling prices equaled budgeted amounts. What is the impact on profitability?

A.

The company earned a profit.

Answer (A) iscorrect. The expected sales mix is 40% for Product X and 60% for Product Y. Weighted-average UCM equals $7 {[$10 – ($10 × 60%)] × 40%} + {[$30 – ($30 × 70%)] × 60%}. Weighted-average selling price equals $22 [($10 × 40%) + ($30 × 60%)]. The weighted-average CMR therefore equals 0.3181818 ($7 ÷ $22), and the breakeven point in sales dollars equals $942,857 ($300,000 ÷ 0.3181818). If actual sales were 50% Product X and 50% Product Y, weighted-average UCM would equal $6.50 {[$10 – ($10 × 60%)] × 50%} + {[$30 – ($30 × 70%)] × 50%}. Weighted-average selling price would equal $20 [($10 × 50%) + ($30 × 50%)]. The weighted-average CMR would therefore equal 0.325 ($6.50 ÷ $20), and the breakeven point in sales dollars would equal $923,077 ($300,000 ÷ 0.325). Given that sales reached the budgeted breakeven point of $942,857, Catfur must have made a profit of $19,780 ($942,857 – $923,077).

B.

Cannot be determined from the information given.

C.

The company sustained a loss.

D.

The company is operating at the breakeven point.

------------------------------ Tayba Al-Mehdar Analyst Khobar Saudi Arabia ------------------------------

Original Message: Sent: 09-05-2023 03:01 PM From: Govind Jha Subject: CMA part 2 - cvp

Question: 19 A company sells two products with the following results for the year just ended. Product 1 Product 2 Sales $12,000,000 $3,000,000 Variable costs 4,800,000 1,500,000 Fixed costs 5,400,000 400,000 Assuming the product mix and the sales mix remain the same, the company's breakeven point in sales dollars is A. $12,100,000 B. $13,810,000 C. $10,000,000 D. $9,800,00

------------------------------ Govind Jha Accountant Ulhasnagar 3 MH India

Original Message: Sent: 10-20-2020 07:50 AM From: Sanjana M Subject: CMA part 2 - cvp

Hi Tabya,

For multiple products, the weighted average Selling price would be used.

------------------------------ Sanjana

Original Message: Sent: 10-19-2020 06:13 AM From: Tayba Al-Mehdar Subject: CMA part 2 - cvp

why did she use Weighted average selling price in her calculation.?

Fact Pattern: Catfur Company has fixed costs of $300,000. It produces two products, X and Y. Product X has a variable cost percentage equal to 60% of its $10 per unit selling price. Product Y has a variable cost percentage equal to 70% of its $30 selling price. For the past several years, unit sales of Product X were 40% of total unit sales. That ratio is not expected to change.

Question:25

Assume that Catfur Company achieved its planned breakeven level of sales in dollars, but the mix of products sold was one-to-one. All actual costs and unit selling prices equaled budgeted amounts. What is the impact on profitability?

A.

The company earned a profit.

Answer (A) iscorrect. The expected sales mix is 40% for Product X and 60% for Product Y. Weighted-average UCM equals $7 {[$10 – ($10 × 60%)] × 40%} + {[$30 – ($30 × 70%)] × 60%}. Weighted-average selling price equals $22 [($10 × 40%) + ($30 × 60%)]. The weighted-average CMR therefore equals 0.3181818 ($7 ÷ $22), and the breakeven point in sales dollars equals $942,857 ($300,000 ÷ 0.3181818). If actual sales were 50% Product X and 50% Product Y, weighted-average UCM would equal $6.50 {[$10 – ($10 × 60%)] × 50%} + {[$30 – ($30 × 70%)] × 50%}. Weighted-average selling price would equal $20 [($10 × 50%) + ($30 × 50%)]. The weighted-average CMR would therefore equal 0.325 ($6.50 ÷ $20), and the breakeven point in sales dollars would equal $923,077 ($300,000 ÷ 0.325). Given that sales reached the budgeted breakeven point of $942,857, Catfur must have made a profit of $19,780 ($942,857 – $923,077).

B.

Cannot be determined from the information given.

C.

The company sustained a loss.

D.

The company is operating at the breakeven point.

------------------------------ Tayba Al-Mehdar Analyst Khobar Saudi Arabia ------------------------------