Question

Konerko Company sells two types of computer chips. The sales mix is 20% (Q-Chip) and 80% (Q-Chip Plus). Q-Chip has a contribution margin per unit of $24 and Q-Chip Plus has a contribution margin per unit of $48. Konerko's fixed costs are $540,000. How many units of Q-Chip would be sold at the break-even point? 7,500 2,500 108,000 10,000

Answer 1

• All working forms part of the answer
• Working

	Q Chips	Q Chips Plus
Sales Mix	20%	80%
Unit Contribution	$                                     24.00	$                      48.00
Weighted Average Unit Contribution	$                                        4.80	$                       38.40
Total Weighted Average unit Contribution	[4.8 + 38.4]	$                       43.20
Total Fixed Cost	[given]	$             540,000.00
Total no. of Break Even Units	[540000 / 43.2]	12,500 units
Sales Mix of Q Chips		20%
Units sold of Q chips at Break Even point [Answer]	[12500 x 20%]	2,500 units

• Hence, the correct answer is Option #2: 2,500 units