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Al Corp: sales mix and weighted average contribution margin

Al Corporation sells three products J, K, and L. The following information was taken from a recent budget:
Unit sales 40,000 130,000 30,000
Selling price $60 $80 $75
Variable cost 40 65 50

Total fixed costs are anticipated to be $2,450,000.

1. Determine Al's sales mix.
2. Determine the weighted average contribution margin.
3. Calculate the number of units of J, K, and L that must be sold to break even.
4. If Al's desires to increase company profitability, should it attempt to increase or decrease the sales of product K relative to those of J and L? Please explain.

Solution Preview

please refer to the attachment for full details.

1. Determine Al's sales mix.
Products J K L Total
Sale price per unit $60 $80 $75.00  
Unit sales 40,000 130,000 30,000  
Revenue=Price*Unit $2,400,000 $10,400,000 $2,250,000 $15,050,000
Sales mix = Share in total Revenue
= Revenue i / Total Revenue 15.95% 69.10% 14.95% 100%

2. Determine ...

Solution Summary

The solution carefully explains each question complete with the computations to arrive at the solution.