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    Al Corp: sales mix and weighted average contribution margin

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    Al Corporation sells three products J, K, and L. The following information was taken from a recent budget:
    J K L
    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.

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    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

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