Question
In: Accounting
Using the following unit data for a company that produces Product A and B, what is...
Using the following unit data for a company that produces
Product A and B, what is the breakeven point (round to nearest
unit) when fixed costs total $175,000?
Product A Product B
Units sold last year 2,250 1,000
Sales price $200 $450
Cost of goods sold 145 350
Sales
commission 15
37
Variable costs 160 387
Contribution margin $ 40 $ 63
Solutions
Expert Solution
Breakeven units
Product A= 2574 units
Product B= 1144 units
|
Working |
Product A |
Product B |
|
|
A |
Price |
$ 200.00 |
$ 450.00 |
|
B |
Variable Cost per unit |
$ 160.00 |
$ 387.00 |
|
C = A - B |
Contribution Margin per unit |
$ 40.00 |
$ 63.00 |
|
D |
Product Mix |
69.23% |
30.77% |
|
E = C x D |
Weighted Average Contribution Margin |
$ 27.69 |
$ 19.38 |
|
A |
Total Fixed Cost |
$ 1,75,000.00 |
|
B |
Weighted Average Contribution Margin (27.69+19.38) |
$ 47.08 |
|
C = A/B |
Multi Product Break Even point |
3,717.32 |
|
C x 42% |
Product A |
2,574 |
|
C x 29% |
Product B |
1,144 |
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$
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