Question

# Steven Company has fixed costs of \$430,652. The unit selling price, variable cost per unit, and...

Steven Company has fixed costs of \$430,652. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below.

 Product Selling Price per Unit Variable Cost per Unit Contribution Margin per Unit X \$1,280 \$480 \$800 Y 667 357 310

The sales mix for Products X and Y is 60% and 40%, respectively. Determine the break-even point in units of X and Y. Round answers to the nearest whole number.
units of X
units of Y

Solution

 Units of X 713 Units Units of Y 285 Units

Working :

Step 1 : Weighted Contribution per Unit :

Weighted Contribution per Unit = (Contribution of X per Unit * Sales Mix Ratio) + (Contribution of Y per Unit * Sales Mix Ratio)

= (\$ 800 * 60%) + (\$ 310 * 40%)

= \$ 480 + \$ 124

= \$ 604

Step 2 Overall Breakeven Point :

Breakeven Point for Company = Fixed Costs / Weighted Contribution per Unit

= \$ 430,652 / \$ 604

= 713 Units

Setp 3 : Units of X and Units of Y :

Units of X = Total Units * Sales Mix Ratio of X

= 713 * 60%

= 428 Units

Units of Y = Total Units * Sales Mix Ratio of Y

= 713 * 40%

= 285 Units

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