Question - City Electronix sells television sets and DVD players. The business is divided into two divisions along product lines. CVP income statements for a recent quarter's activity are presented below.
TV Division DVD Division Total
Sales $700,000 $300,000 $1,000,000
Variable costs 490,000 240,000 730,000
Contribution margin $210,000 $ 60,000 270,000
Fixed costs 135,000
Net income $135,000
Instructions -
(a) Determine sales mix percentage and contribution margin ratio for each division.
(b) Calculate the company's weighted-average contribution margin ratio.
(c) Calculate the company's break-even point in dollars.
(d) Determine the sales level in dollars for each division at the break-even point.