Question

Question #3:

The selling price of a Corporation's only product is $170.00 per unit and its variable expense is $39.10 per unit. The company's monthly fixed expense is $641,410.

Required:

Assume the company's monthly target profit is $65,450. Determine the unit sales to attain that target profit. Show your work!

Question #4:

A Company has fixed costs of $160,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company’s two products are provided below.

Product	Selling Price	Variable Cost per unit	Contribution Margin per unit
X	$180	$100	$80
Y	$100	$60	$40

The sales mix for product X and Y is 60% and 40% respectively. Determine the break-even point in units of X and Y.

Answer 1

3.

Selling price per unit = $170

Variable cost per unit = $39.10

Contribution margin per unit = Selling price per unit- Variable cost per unit

= 170-39.10

= 130.90

Fixed expense = $641,410

Unit sales to earn target profit = (Fixed expense + Target profit)/Contribution margin per unit

= (641,410+65,450)/130.90

= 5,400 units

4.

	X	Y	Total
Selling price per unit	180	100
Variable cost per unit	100	60
Contribution margin per unit (A)	80	40
Sales mix (B)	60%	40%
Weighted average contribution margin per unit (A) x (B)	48	16	64

Break even point (units ) = fixed costs/ Weighted average contribution margin per unit

= 160,000/64

= 2,500

Break even quantity of X = Break even point (units ) x Sales mix proportion of X

= 2,500 x 60%

= 1,500

Break even quantity of Y = Break even point (units ) x Sales mix proportion of Y

= 2,500 x 40%

= 1,000

Kindly comment if you need further assistance.

Thanks‼!