Question

# A company sells three different products: Product A, Product B, and Product C. The contribution margin...

A company sells three different products: Product A, Product B, and Product C. The contribution margin per unit for each of the products is as follows: \$30 for Product A, \$50 for Product B, and \$60 for Product C. The company’s sales mix in units is as follows: 50% Product A, 30% Product B, and 20% Product C. The company’s fixed costs amount to \$1,680,000. How many units of each product must the company sell in order to break even?

 Products A B C Contribution Margin Per Unit (a) \$30 \$50 \$60 Sales Mix (b) 50% 30% 20% Total Contribution Margin Per unit (a * b) \$15 \$15 \$12 \$42 Total Fixed Costs (c ) \$1,680,000 Total Contribution Margin Per Unit (d) \$42 Total Break-even point in units (c / d) 40,000 Sales Mix 50% 30% 20% Break-even point in units (40,000*50/100); (40,000*30/100); (40,000*20/100) 20,000 12,000 8,000

Therefore, the break-even point in units for Product A is 20,000, Product B is 12,000 and Product C is 8,000 units.

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