Question

Assume that Bisque Co. sold 12,000 units of Product A and 18,000 units of Product B...

Assume that Bisque Co. sold 12,000 units of Product A and 18,000 units of Product B in the last year. The unit contribution margins for Products A and B are $10 and $20, respectively. Bisque has fixed costs of $420,000. The break-even point in units is

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Answer #1

Bisque Co.'s break-even point in units is 26,250.

Given:

Units sold of Product A = 12,000 units

Units sold of Product B = 18,000 units

Sales mix = 12,000:18,000

= 2:3

Contribution margin per unit of Product A = $10

Contribution margin per unit of Product B = $20

Fixed cost = $420,000

Weighted average contribution margin per unit calculation:

Now, substitute the values in break-even formula:

Bisque Co.'s break-even point in units is 26,250.

To break-even, 10,500 units (26,250*(2/5)) of Product A and 15,750 units (26,250*(3/5)) of Product B should be sold.

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