Question

# Edgewater Enterprises manufactures two products. Information follows:      Product A Product B Sales price \$ 13.50 \$...

Edgewater Enterprises manufactures two products. Information follows:

 Product A Product B Sales price \$ 13.50 \$ 17.20 Variable cost per unit \$ 6.75 \$ 7.75 Product mix 40% 60%

Calculate the break-even point if Edgewater’s total fixed costs are \$247,000. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole number.)

Contribution margin per unit = Sales price per unit - Variable cost per unit

 Product A Product B Contribution margin per unit \$6.75 (\$13.5-\$6.75) \$9.45 (\$17.2-\$7.75)

Weighted average contribution per unit = (Product A contribution margin per unit * Sales mix) + (Product B contribution margin per unit * Sales mix)

= (\$6.75 * 40%) + (\$9.45 * 60%)

= \$2.7 + \$5.67

= \$8.37

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

= \$247,000 / \$8.37

= 29,510 units

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