Question

Brief Exercise 20-8

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NoFly Corporation sells three different models of a mosquito “zapper.” Model A12 sells for $55 and has variable costs of $43. Model B22 sells for $110 and has variable costs of $72. Model C124 sells for $416 and has variable costs of $321. The sales mix of the three models is A12, 60%; B22, 30%; and C124, 10%.

If the company has fixed costs of $192,766, how many units of each model must the company sell in order to break even? (Round Per unit values to 2 decimal palces, e.g. 15.25 and final answers to 0 decimal places, e.g. 5,275.)

Model
A12
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B22
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C124
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Total break-even
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units

Answer 1

Nofly Corporation :
Particulars		Model A12	Model B22	Model C124
Selling price		55	110	416
Less: Variable costs		43	72	321
Contribution margin		12	38	95
Salex mix ratio		60%	30%	10%
Weighted average contribution margin = (12*60%)+(38*30%)+(95*10%)						$    28.10	Per unit
Total break even (in units) = Fixed costs / Contribution margin per unit
		192766/28.1
		6860	Units
Now, These units will be apportioned to particular models In their sales mix ratio…
Total break even units = 6860 units
		Model A12	Model B22	Model C124
Sales mix ratio		60%	30%	10%
No of units		4116	2058	686
		6860*60%	6860*30%	6860*10%