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Using the following unit data for a company that produces Product A and B, what is...

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Accounting

Using the following unit data for a company that producesProduct A and B, what is the breakeven point (round to nearestunit) 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
Salescommission     15    37
Variable costs   160   387
Contribution margin $ 40 $ 63

Answer & Explanation Solved by verified expert
3.9 Ratings (415 Votes)

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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