Business, 08.07.2021 02:50 natiem1803
Muscle Beach, Inc., makes three models of high-performance weight-training benches. Current operating data are summarized here:
MegaMuscle PowerGym ProForce
Selling price per unit $ 143 $ 210 $ 283
Contribution margin per unit 44 78 57
Monthly sales volume—units 3,070 2,000 1,010
Fixed expenses per month Total of $326,400
a. Calculate the contribution margin ratio of each product
b. Calculate the firm's overall contribution margin ratio.
c. Calculate the firm's monthly break-even point in sales dollars.
d. Calculate the firm's monthly operating income.
e-1. Management is considering the elimination of the ProForce model due to its low sales volume and low contribution margin ratio. As a result, total fixed expenses can be reduced to $276,360 per month. Assuming that this change would not affect the other models, what would be the effect on net operating income.
f-1. Assume the same facts as in requirement e-1. Assume also that the sales volume for the PowerGym model will increase by 492 units per month if the ProForce model is eliminated. What would be the effect on operating income.
Answers: 3
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Muscle Beach, Inc., makes three models of high-performance weight-training benches. Current operatin...
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