Lakers company produces two products. the following information is available: product x product y selling price per unit $46 $36 variable cost per unit $38 $24 total fixed costs are $234,000. lakers plans to sell 21,000 units of product x and 7,000 units of product y. required: a) compute the contribution margin for each product. b) what is the expected net income? c) assume the sales mix is 3 units of product x for every 1 unit of product y. what is the break-even point in units for each product? d) assume the sales mix is 3 units of product x for every 2 units of product y. what is the break-even point in units for each product?

A) Contribution margin : Product X: $8; Product Y: $12

B)The expected net income: $18,000

C) Break-even point in units for each product is Product X 19,500 units, Product Y 6,500 units.

D) Break-even point in units for each product is Product X 14,625 units, Product Y 9,750 units.

Explanation:

A) Contribution margin for each product:

Product X = Selling price of X - Variable cost of X = 46 - 38 = $8

Product Y = Selling price of Y - Variable cost of Y = 36 - 24 = $12

B) The expected net income:

Expected net income = Contribution margin of product X x Units of Product X sold + Contribution margin of product Y x Units of Product Y sold  - Fixed cost = 8 x 21,000 + 12 x 7,000 - 234,000 = $18,000

C) The break-even point in units for each product assuming the sales mix is 3 units of Product X for every 1 unit of Product Y:

Denote a is the number of Y BEP (in units) => 3a is the number of X in BEP (in units)

We have 3a x 8 + a x 12 = 234,000 <=> 36a = 234,000 <=> a = $6,500 <=> 3a = 19,500

Thus,  break-even point in units for each product is Product X 19,500 units, Product Y 6,500 units.

D) The break-even point in units for each product assuming the sales mix is 3 units of Product X for every 2 units of Product Y:

Denote b is the number of Y BEP (in units) => 3b/2 is the number of X in BEP (in units)

We have 3b/2 x 8 + b x 12 = 234,000 <=> 24b = 234,000 <=> b = $9,750 <=> 3b/2 = 14,625

Thus,  break-even point in units for each product is Product X 14,625 units, Product Y 9,750 units.