Question

Mission Foods produces two flavors of tacos, chicken and fish, with the following characteristics:

 

 Chicken FishSelling price per taco$3.40 $5.50 Variable cost per taco 1.70  2.75 Expected sales (tacos) 195,000  291,000 

 

The total fixed costs for the company are $124,000.

 

Required:

 

b. Assuming that the product mix would be 36 percent chicken and 64 percent fish at the break-even point, compute the break-even volume. (In your computations, round up the total units to break-even to the nearest whole number and round other intermediate calculations to 2 decimal places.  Round your final answers up to the nearest whole unit.)

 

Answer 1

	product mix percentage	Contribution margin per unit	weighted average contribution margin
Chicken	36%	$3.40 - $1.70 = $1.70	$1.70 * 36% = $0.61
Fish	64%	$5.50 - $2.75 = $2.75	$2.75 * 64% = $1.76
Weighted average contribution margin			$                              2.37

Total Break even sales in units = Fixed costs / Contribution margin

Total Break even sales in units = $124,000 / $2.37

Total Break even sales in units = 52,320.68

	Sales Mix	Total Break even sales in units	Break-even units
Chicken	36%	52,320.68	18,835
Fish	64%	52,320.68	33,485

You can reach me over comment box if you have any doubts. Please rate this answer