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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Exercise 4-33 Â Multiple-Product Breakeven, Break-Even Sales Revenue
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Refer to the information for Cherry Blossom Products above. Suppose that in the coming year, the company plans to produce an extra-thick yoga mat for sale to health clubs. The company estimates that 9,000 mats can be sold at a price of $15 and a variable cost per unit of $9. Total fixed cost must be increased by $28,980 (making total fixed cost $113,900). Assume that antici- pated sales of the other products, as well as their prices and variable costs, remain the same.
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Required:
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1.      What is the sales mix of DVDs, equipment sets, and yoga mats?
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2.      Compute the break-even quantity of each product.
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3.      Prepare an income statement for Cherry Blossom Products for the coming year. What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break-even sales revenue. (Note: Round the contribution margin ratio to three decimal pla- ces; round the break-even sales revenue to the nearest dollar.)
4.      Compute the margin of safety for the coming year in sales dollar
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