Question

McCoy Brothers manufactures and sells two products, A and Z in the ratio of 5:2. Product A sells for $88; Z sells for $109. Variable costs for product A are $43; for Z $49. Fixed costs are $510,600. Compute the number of units of Product A McCoy must sell to break even.

Answer 1

	Computation of contribution margin per unit
		Product A	Product Z
	Sell Price	$          88	$        109
	Less:
	Variable Costs per unit	$          43	$          49
	Contribution Margin	$          45	$          60
	Sales Mix	5	2
	Contribution Margin At sales mix	$ 225.00	$ 120.00
	Total Contribution Margin For A Sales Mix	$                       345.00
	Sales Mix Break-Even Point = Fixed Costs / Sales Mix Contribution Margin
	=$510600/345
	=1480 sales mix
	Therefore units of A need to be sold = 1480 sales mix *5 per sales mix
	=7400 units