Question

Pure Water Products produces two types of water filters. One attaches to the faucet and cleans all water
that passes through the faucet. The other is a pitcher-filter that only purifies water meant for drinking.
Revenue and cost information for each product appears below:

●      the unit that attaches to the faucet is sold for $70 and has variable costs of $30

●     the pitcher-filter sells for $80 and has variable costs of $45

●     fixed costs total $424,000

●     Pure Water sells 4 faucet models for every 3 pitcher-filters sold

Calculate the number of units of the pitcher-filters that must be sold in order for Pure Water Products
to break-even.

Answer 1

	Faucet	Pitcher filter
Selling Price	70	80
Variable costs	30	45
Contribution	40	35
Contribution per set	=$40X4+$35X3
	=$265	per set
Set Contains 4 faucet models for every 3 pitcher-filters
Fixed costs =	$424000
Break even Sets =	Fixed costs/Contribution per set
=	=424,000/265
	1600	Sets
Number of units of the pitcher-filters that must be sold in
order for Pure Water Products to break-even:
Each set contains 3 Pitcher filters , So Break even units of Pitcher Filters
	= 1,600 X 3
	= 4,800 Pitcher Filters