Question

Barclay Enterprises manufactures and sells three distinct styles of bicycles: the Youth model sells for $480 and has a unit contribution margin of $288; the Adult model sells for $940 and has a unit contribution margin of $564; and the Recreational model sells for $1,160 and has a unit contribution margin of $696. The company's sales mix includes: 5 Youth models; 9 Adult models; and 6 Recreational models. If the firm's annual fixed costs total $8,340,000, calculate the firm's break-even point in total sales dollars.

Multiple Choice

$13,674,071.

$13,900,000.

$13,415,584.

$14,384,416.

$13,417,163.

Fuschia Company's contribution margin per unit is $13. Total fixed costs are $93,340. What is Fuschia's break-even point in units?

rev: 04_17_2018_QC_CS-124760

Multiple Choice

7,180.

2,747.

7,247.

3,960.

71,800.

Answer 1

Solution:
1.	Answer is 2nd option $13,900,000
Working Notes:
	Break-even point in total sales dollars = Total fixed expenses / Contribution margin ratio
	Contribution margin ratio = Contribution margin of a sales mix / Sale value of a sales mix
	=Contribution margin for 5 Youth models; 9 Adult models; and 6 Recreational models                                   / Sale value of 5 Youth models; 9 Adult models; and 6 Recreational models
	=(5 x $288 + 9 x $564 + 6 x $696 )/(5 x $480 + 9 x $940 + 6 x $1,160 )
	=10,692/17,820
	=0.60
	Break-even point in total sales dollars = Total fixed expenses / Contribution margin ratio
		=$8,340,000/0.60
		=$13,900,000
2.	Answer is 1st option 7,180
Working Notes:
	Break-even point in units = Total fixed costs/ Contribution margin per unit
		=$93,340/$13
		=7,180 units
Please feel free to ask if anything about above solution in comment section of the question.