Question

Data related to the expected sales of laptops and tablets for Tech Products Inc. for the current year, which is typical of recent years, are as follows:

Products Unit Selling Price Unit Variable Cost Sales Mix

Laptops $1,000 $500 40%

Tablets 600 300 60%

The estimated fixed costs for the current year are $6,384,000. Required: 1. Determine the estimated units of sales of the overall (total) product, E, necessary to reach the break-even point for the current year. units____

2. Based on the break-even sales (units) in part (1), determine the unit sales of both laptops and tablets for the current year.

Laptops units_____

Tablets units_____

3. Assume that the sales mix was 60% laptops and 40% tablets. Compare the breakeven point with that in part (1). Why is it so different?____ units

The break-even point is_____ in this scenario than in part (1) because the sales mix is_____ toward the product with the higher_______ of product.

Answer 1

• All working forms part of the answer
• Note that tabular data is pasted as a paragraph, and I was confused regarding if $1000 and $500 are selling price, or $1000 and $600 are selling price. So I solved the answers with both the values. You chose the solution based on your question data.
• Solution with Sales price $1000 and $500 for laptops and tablets respectively

	Laptops	Tablets
Unit Selling Price	$1000	$500
Unit Variable cost	$600	$300
Unit Contribution margin	$400	$200
Sales Mix	40%	60%
Weighted Average contribution margin	$160	$120
Total Fixed Cost	$6384000
Total Weighted average contribution margin	$280
Overall Break Even in Units – ANSWER 1	22800
Overall Break Even in Units	22800
Laptop Units [40%] – ANSWER 2	9120
Tablet Units [60%] - ANSWER 2	13680
	Laptops	Tablets
Unit Selling Price	$1000	$500
Unit Variable cost	$600	$300
Unit Contribution margin	$400	$200
Sales Mix	60%	40%
Weighted Average contribution margin	$240	$80
Total Fixed Cost	$6384000
Total Weighted average contribution margin	$320
Overall Break Even in Units – ANSWER 3	19,950

The Break Even point is LESS in this scenario than in part (1) because the sales mix is Greater toward the product with the higher Unit Contribution Margin of Product.

• Solution with Sales price $1000 and $600 for laptops and tablets respectively

Answer 1

	Laptops	Tablets
Unit Selling Price	$1000	$600
(-) Unit Variable cost	$500	$300
Unit Contribution margin	$500	$300
Sales Mix	40%	60%
Weighted Average contribution margin	[500x40%] $200	[300 x 60%] $180

Total Fixed Cost	$6,384,000
Total Weighted average contribution margin [200 + 180]	$380
Overall Break Even in Units [6384000 / 380]	16800

Answer 2

Overall Break Even in Units	16,800
Laptop Units [40%]	6720
Tablet Units [60%]	10080

Answer 3

	Laptops	Tablets
Unit Selling Price	$1000	$600
(-) Unit Variable cost	$500	$300
Unit Contribution margin	$500	$300
Sales Mix	60%	40%
Weighted Average contribution margin	$300	$120
Total Fixed Cost	$6,384,000
Total Weighted average contribution margin [300 + 120]	$420
Overall Break Even in Units	15,200

The Break Even point is LESS in this scenario than in part (1) because the sales mix is Greater toward the product with the higher Unit Contribution Margin of Product.