Sales Mix and Break-Even Analysis Heyden Company has fixed costs of $1,640,000. The unit selling price,...

Sales Mix and Break-Even Analysis

Heyden Company has fixed costs of $1,640,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products follow:

Product	Selling Price	Variable Cost per Unit	Contribution Margin per Unit
QQ	$660	$340	$320
ZZ	820	600	220

The sales mix for Products QQ and ZZ is 30% and 70%, respectively. Determine the break-even point in units of QQ and ZZ. If required, round your answers to the nearest whole number.

a. Product QQ units

b. Product ZZ units

Solutions

Expert Solution

Solution

Product QQ	1,968 Units
Product ZZ	4,592 Units

Working

Working		Product QQ	Product ZZ	TOTAL
A	Revenues	$ 660.00	$ 820.00
B	Variable Cost	$ 340.00	$ 600.00
C = A - B	Contribution Margin	$ 320.00	$ 220.00
D	Product Mix	30.00%	70.00%	100.00%
E = C x D	Weighted Average Contribution Margin	$ 96.00	$ 154.00	$ 250.00

A	Total Fixed Cost	$ 1,640,000.00
B	Weighted Average Contribution Margin	$ 250.00
C = A/B	Multi Product Break Even point	6,560
C x 30%	Product QQ	1,968
C x 70%	Product ZZ	4,592

ekkarill92 answered 1 year ago

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