Question

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?

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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