Hair Co manufactures three types of electrical goods for hair: curlers （C), straightening

Hair Co manufactures three types of electrical goods for hair: curlers (C), straightening irons (S) and dryers (D.) The budgeted sales prices and volumes for the next year are as follows:

Each product is made using a different mix of the same materials and labour. Product S also uses new revolutionary technology for which the company obtained a ten-year patent two years ago. The budgeted sales volumes for all the products have been calculated by adding 10% to last year’s sales.

The standard cost card for each product is shown below.

Both skilled and unskilled labour costs are variable.

The general fixed overheads are expected to be $640,000 for the next year.

Required:

(a) Calculate the weighted average contribution to sales ratio for Hair Co.

Note: round all workings to 2 decimal places. (6 marks)

(b) Calculate the total break-even sales revenue for the next year for Hair Co.

Note: round all workings to 2 decimal places. (2 marks)

(c) Using the graph paper provided, draw a multi-product profit-volume (PV) chart showing clearly the profit/loss lines assuming:

(i) you are able to sell the products in order of the ones with the highest ranking contribution to sales ratios first; and

(ii) you sell the products in a constant mix.

Note: only one graph is required. (9 marks)

(d) Briefly comment on your findings in (c). (3 marks)