Question

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

Answer #1

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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