Question
In: Accounting
Alpha Company is selling three products: A, B and C. The company sells three units of...
Alpha Company is selling three products: A, B and C. The company
sells three units of A for every unit of C, and two units of B for
every unit of A.
Fixed costs are 720,000
Contribution margins are:
A - 1.90
B - 2
C - 2.30
How many units of B would the company sell at break even
point?
Solutions
Expert Solution
- All working forms part of the answer
- Working
|
Working |
A |
B |
C |
Total |
|
|
A |
Sales if 1 unit of C is sold |
3 [1 x 3] |
6 [3 x 2] |
1 |
10 |
|
B |
Sales Mix - % of total |
30% |
60% |
10% |
100% |
|
C |
Contribution margin |
$ 1.90 |
$ 2.00 |
$ 2.30 |
|
|
D = B x C |
Weighted Contribution margin |
$ 0.57 |
$ 1.20 |
$ 0.23 |
$ 2.00 |
- Answer
|
A |
Total Fixed Cost |
$ 720,000.00 |
|
B |
Weighted Contribution margin |
$ 2.00 |
|
C = A/B |
Total Break Even units |
360,000 |
|
D |
B's Sales Mix % |
60% |
|
E = C x D |
Units of B the company sell at Break Even point |
216,000 |
Correct Answer = 216,000 units of B
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