Tiago makes three models of camera lens. Its product mix and contribution margin per unit follow: Percentage of Unit salesContribution Margin per unit
Lens A25%$38
Lens B40 30
Lens C

35 43

Required:
1.Determine the weighted-average contribution margin per unit. (Round your intermediate calculations and final answer to 2 decimal places.)

2.
Determine the number of units of each product that Tiago must sell to break even if fixed costs are $187,000. (Use Weighted average contribution margin as calculated in Requirement 1. Round your answers to the nearest whole number.)

3.Determine how many units of each product must be sold to generate a profit of $73,000. (Use Weighted average contribution margin as calculated in Requirement 1. Round your answers to the nearestwhole number.)

Tiago

1. Weighted-average contribution margin per unit:

              Weighted-Average

              Contribution margin

                        per unit

Lens A            $9.5

Lens B            12.0

Lens C            15.05

2.  Break-even point (units) for each = Fixed cost/Contribution margin per unit

= Lens A = 4,921 units

Lens B = 6,233 units

Lens C = 4,349 units

3. Units to generate a profit target:  = (FC+ Target Profit)/Contribution per unit

Lens A = 6,842 units

Lens B = 8,667 units

Lens C = 6,047 units

Explanation:

a) Data and Calculations

              Percentage of      Contribution        Weighted-Average

                 Unit sales        Margin per unit      Contribution margin per unit

Lens A            25 %                $ 38                          $9.5

Lens B            40                       30                           12.0

Lens C            35                       43                            15.05

Fixed Costs of $187,000:

Lens A = 25% of $187,000 = $46,750

Lens B = 40% of $187,000 = $74,800

Lens C = 35% of $187,000 = $65,450

Break-even point (units) for each = Fixed cost/Contribution margin per unit

= Lens A = $46,750/$9.5 = 4,921 units

Lens B = $74,800/$12 = 6,233 units

Lens C = $65,450/$15.05 = 4,349 units

Profit of $73,000

Lens A = 25% of $73,000 = $18,250

Lens B = 40% of $73,000 = $29,200

Lens C = 35% of $73,000 = $25,550

Units to generate a profit target:  = (FC+ Target Profit)/Contribution per unit

Lens A =  ($46,750 + $18,250)/$9.5 = 6,842 units

Lens B = ($74,800 + $29,200)/$12 = 8,667 units

Lens C = ($65,450 + $25,550)/$15.05 = 6,047 units

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