A Company manufactures and sells two products: A and B. The following table shows the information...

A Company manufactures and sells two products: A and B. The following table shows the information relating to these products: A B Total Selling price per unit $20 $40 Variable cost per unit $10 $20 Total Fixed costs $80,000 Required:

If Sales mix is 2 :3 for A and B respectively, calculate the breakeven point in units and in dollars for each of the two products.

Expert Solution

	Product A	Product B
Selling price per unit	$20	$40
Less : Variable cost per unit	$10	$20
Contribution per unit	$10	$20
Sales Mix	2/5	3/5
	$4	$12
Weighted Average Contribution per unit	$16

Break Even Point in Units = Fixed Costs / Weighted Average Contribution per unit

= $80,000 / $16 per unit

= 5,000 Units

Breakeven point in units

Product A = 5000 Units x 2/5 = 2,000 Units

Product B = 5000 Units x 3/5 = 3,000 Units

Breakeven point in Dollars

Product A = 2,000 Units x $20 = $40,000

Product B = 3,000 Units x $40 = $1,20,000

ekkarill92 answered 2 years ago

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