Question

# Sales Mix and Break-Even Analysis Michael Company has fixed costs of \$500,240. The unit selling price,...

Sales Mix and Break-Even Analysis

Michael Company has fixed costs of \$500,240. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products follow:

 Product Selling Price Variable Cost per Unit Contribution Margin per Unit QQ \$570 \$330 \$240 ZZ 310 240 70

The sales mix for Products QQ and ZZ is 20% and 80%, respectively. Determine the break-even point in units of QQ and ZZ. If required, round your answers to the nearest whole number.

a. Product QQ units

b. Product ZZ units

 product mix percentage Contribution margin per unit weighted average contribution margin QQ 20% \$               240 \$240*20% = \$48 ZZ 80% \$                  70 \$70*80% = \$56 Weighted average contribution margin \$                        104

Total Break even sales in units = \$500,240/\$104 = 4,810 units

 Sales Mix Total Break even sales in units Break even units QQ 20% 4810 962 ZZ 80% 4810 3848

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