Sheffield sells books, movies, and magazines to a wide customer base. In a typical month, about 40% of its sales volume is from books,
40% from movies, and 20% from magazines. The selling price and cost information for each of these product categories is as follows.
Books Movies Magazines
Selling price $10 $14 $6
Variable cost/unit 3 9 3
In addition, Sheffield incurs facility and administrative costs that average $29,160 per month.
(a)
Your Answer Correct Answer
v Your answer is correct.
Find the weighted-average contribution margin per unit for this company. (Round answer to 2 decimal places, e.g. 15.25.)
Weighted-average contribution margin $ 54 J per unit
First calculate each product’s share of the total weighted average contribution margin (WACM) per unit. Then sum those to
get the company's total WACM.
Product CM per unit x Sales Mix WACM/unit
Books $10-%3=%7 0.40 $2.80
Movies $14-%9=%5 040 2.00
Magazines $6-$3 = %3 0.20 0.60
Total WACM/unit $5.40
, Determine how many units from each product category Sheffield must sell to break even. (Round answers to 0 decimals, e.g. 15.)
Books ‘ 2160 ] units
Movies ! 2160 l units
Magazines l 1080 l units
eTextbook and Media
Solution
Calculate the break-even point in units, then use the sales mix percentages to find the number of units of each product that is
needed.
Sales in units to break even = Total fixed costs - WACM/unit
Sales in units to break even = $29,160 + $5.40 = 5,400 units
Product Calculation Units
Books 40% x 5,400 units 2,160
Movies 40% x 5,400 units 2,160
Magazines 20% x 5,400 units 1,080
Total units 5,400
Sheffield normally sells 3,200 books each month. Given the current sales mix, how many movies and magazines must it normally
sellin a month?
Books ’ 3200 | units
Movies ‘ 3200 ’ units
Magazines | 1600 ‘ units
eTextbook and Media
Solution
Books typically comprise 40% of the company’s sales volume. If Sheffield sells 3,200 books, we can divide 3,200 by 0.40 to
find the total sales volume.
Total sales volume = 3,200 + 0.40 = 8,000.
The company sells the same number of books as it does movies. The remainder is magazines.
8,000 - (3,200 x 2) = 1,600
1,600 magazines, 3,200 books, and 3,200 movies
40% from movies, and 20% from magazines. The selling price and cost information for each of these product categories is as follows.
Books Movies Magazines
Selling price $10 $14 $6
Variable cost/unit 3 9 3
In addition, Sheffield incurs facility and administrative costs that average $29,160 per month.
(a)
Your Answer Correct Answer
v Your answer is correct.
Find the weighted-average contribution margin per unit for this company. (Round answer to 2 decimal places, e.g. 15.25.)
Weighted-average contribution margin $ 54 J per unit
First calculate each product’s share of the total weighted average contribution margin (WACM) per unit. Then sum those to
get the company's total WACM.
Product CM per unit x Sales Mix WACM/unit
Books $10-%3=%7 0.40 $2.80
Movies $14-%9=%5 040 2.00
Magazines $6-$3 = %3 0.20 0.60
Total WACM/unit $5.40
, Determine how many units from each product category Sheffield must sell to break even. (Round answers to 0 decimals, e.g. 15.)
Books ‘ 2160 ] units
Movies ! 2160 l units
Magazines l 1080 l units
eTextbook and Media
Solution
Calculate the break-even point in units, then use the sales mix percentages to find the number of units of each product that is
needed.
Sales in units to break even = Total fixed costs - WACM/unit
Sales in units to break even = $29,160 + $5.40 = 5,400 units
Product Calculation Units
Books 40% x 5,400 units 2,160
Movies 40% x 5,400 units 2,160
Magazines 20% x 5,400 units 1,080
Total units 5,400
Sheffield normally sells 3,200 books each month. Given the current sales mix, how many movies and magazines must it normally
sellin a month?
Books ’ 3200 | units
Movies ‘ 3200 ’ units
Magazines | 1600 ‘ units
eTextbook and Media
Solution
Books typically comprise 40% of the company’s sales volume. If Sheffield sells 3,200 books, we can divide 3,200 by 0.40 to
find the total sales volume.
Total sales volume = 3,200 + 0.40 = 8,000.
The company sells the same number of books as it does movies. The remainder is magazines.
8,000 - (3,200 x 2) = 1,600
1,600 magazines, 3,200 books, and 3,200 movies
