Title: Unit 4 Written Assessment

Program: Managerial Accounting

University of the People

Group: 0003

Instructor: Padma Raja

Date: February 28, 2024

Hi-Tech Incorporated produces two different products with the following monthly
data:

Cell GPS Total

Selling price per unit 100 400
Variable cost per unit 40 240
Expected unit sales 21,000 9,000 30,000
Sales mix 70% 30% 100%
Fixed costs $ 1,800,000
Assume the sales mix remains the same at all levels of sales.

Required:

a. Calculate the weighted average contribution margin per unit.

b. How many units in total must be sold to break even?

c. How many units of each product must be sold to break even?

d. How many units in total must be sold to earn a monthly profit of $180,000?

e. How many units of each product must be sold to earn a monthly profit of
$180,000?

MY ANSWERS ARE AS FOLLOWED:

A. Cell’s contribution margin (CM) = selling price per unit – variable cost per unit
= 100 – 40
= 60
GPS contribution margin (CM) = selling price per unit – variable cost per unit
= 400 – 240
= 160
Therefore, weighted average contribution margin per unit = (60x.70) + (160x.30)
= 42 + 48
= 90

B. Break-even point in units = Total fixed costs + Target profit

Weighted average contribution margin
= 1,800,000 + 0
90
Break-even point in units = 20,000 units

C. In order to break even 14,000 (22000 x .70) cell and 6000 (22000 x .30) GPS needs to be sold.
D. Target profit in units = Total fixed costs + Target profit
Weighted average contribution margin
= 1,800,000 + 180,000
90
=1,980,000
90
Target profit in units = 22,000 units

E. In order to earn a profit of $180,000, then 15400 ( 22000 x .70) cell and 6600 (22000 x .30)
GPS must be sold.