3.
Morris Industries manufactures and sells three products (AA, BB,and CC). The sales price and unit variable cost for the threeproducts are as follows:
| Product | Sales Price
per Unit | Variable Cost
per Unit |
| AA | $55 | $25 |
| BB | 45 | 20 |
| CC | 30 | 5 |
Their sales mix is reflected as a ratio of 5:3:2. Annual fixedcosts shared by the three products are $275,000 per year.
A. What are total variable costs for Morriswith their current product mix?
Total variable costs $
B. Calculate the number of units of eachproduct that will need to be sold in order for Morris to breakeven.
| Number of
Units per Product |
| AA | | | |
| BB | | | |
| CC | | | |
C. What is their break-even point in salesdollars?
Break-even point in sales $
D. Using an income statement format, prove thatthis is the break-even point. If an amount is zero, enter "0".
| Income Statement |
| Sales | |
| Product AA | $ |
| Product BB | |
| Product CC | |
| Total Sales | $ |
| Variable Costs | |
| Product AA | $ |
| Product BB | |
| Product CC | |
| Total Variable Costs | $ |
| Contribution Margin | $ |
| Fixed Costs | |
| Net Income | $ |
