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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
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Obed Corp. makes three models of high performance cross country ski machines. Current operating data are summarized below:
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Selling price per unit Variable cost per unit Monthly sales volume (units)
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Ski1
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Ac‚¬ 400 Ac‚¬ 100 600
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Ac‚¬ Ac‚¬
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Ski2 Ski3
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500 Ac‚¬ 250 200 Ac‚¬ 150 400 500
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Fixed expenses per month total Ac‚¬ 185.820.
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Required:
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(a) Calculate the contribution margin ratio for each product
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(b) Calculate the firm's overall contribution margin ratio
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(c) Calculate the firm's break-even point in sales euros
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(d) Calculate the firm's operating income
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(e) Management is considering the elimination of the Ski3 model due to low sales
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volume. As a result, total fixed expenses can be reduced by Ac‚¬60.000 per month. Assuming that this change would not affect the other models, would you recommend the elimination of the Ski3 model ?
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