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?

Homework Answers

Answer #1
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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