Question

BM Company sells two products, X and Y. Product X sells for $20 per unit with variable costs of $11 per unit. Product Y sells for $30 per unit with variable costs of $16 per unit. During this period, BM sold 16,000 units of X and 4,000 units of Y, making Total Revenue of $440,000, and after subtracting variable cost got Total Contribution Margin of $200,000, and after subtracting Total Fixed Cost of $110,000, earned Operating Profit of $90,000. When in breakeven, how many units of X and Y would be sold? (rounded)

a. All listed choices are incorrect.

b. 3,000 units of X, and 1,000 units of Y.

c. 8,800 units of X, and 2,200 units of Y.

d. 8,049 units of X, and 2,683 units of Y.

part 2

What would be the breakeven point in total units? (rounded)

Select one:

a. All listed choices are incorrect.

b. 11,000

c. 5,000

d. 10,732

Answer 1

	Product X	Product Y
Selling price per unit	$20	$30
Variable costs per unit	$11	$16
Contribution margin per unit	$9	$14

Weighted average contribution margin per unit = ($9 * 16,000 / 20,000) + ($14 * 4,000 / 20,000)

= $7.2 + 2.8

= $10

Break-even revenues = Fixed costs / Weighted average contribution margin per unit

= $110,000 / $10

= 11,000

Product X = 11,000 * 16,000 / 20,000 = 8,800

Product Y = 11,000 * 4,000 / 20,000 = 2,200

Part 1

The answer is Option c.

Part 2

The answer is Option b.