Question

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.)**

Answer #1

**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

Edgewater Enterprises manufactures two products. Information
follows:
Product A
Product B
Sales price
$
13.50
$
16.75
Variable cost per unit
$
6.35
$
7.05
Product mix
40%
60%
Suppose that each product’s sales price increases by 20 percent.
Sales mix remains the same and total fixed costs are $250,000.
Calculate the new break-even point for Edgewater. (Round
your intermediate calculations to 2 decimal places and final
answers to the nearest whole number.)

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follows:
Product A
Product B
Sales price
$
14.00
$
17.15
Variable cost per unit
$
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$
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Product mix
40%
60%
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