Question

FCTC manufactures other three other major products namely B, C and D. It furnishes its estimates...

FCTC manufactures other three other major products namely B, C and D. It furnishes its estimates for the year 2020 about these products to you:

Products

B

C

D

Sales Mix Ratio

2

2

1

Selling price per unit

$ 1,800

$ 1,400

$ 1,000

Variable Cost per unit

$ 1,200

$ 1,000

$ 200

Forecast unit sales (units)

8,000 units

8,000 units

4,000 units

Fixed Cost

$ 5,600,000

Calculate breakeven point in units using weighted average contribution per unit and show the proof for your answer

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Answer #1
Product B Product C Product D
Selling Price 1800 1400 1000
Variable Price 1200 1000 200
Contribution Margin 600 400 800
Sales Ratio 2 2 1

Weighted Average Contribution Margin = [(2*600)+(2*400)+(1*800)] / 5 = 560

Total Fixed Cost 5600000

Combined Breakeven Point (Units) = 5600000 / 560 = 10000

Breakeven Point (Units) Product A
[10000*2/5]		 4000
Breakeven Point (Units) Product B
[10000*2/5]		 4000
Breakeven Point (Units) Product C
[10000*1/5]		 2000

Showing Proof for the answer:

Product B Product C Product D
Sales (Units) 4000 4000 2000
Contrinution Margin per unit 600 400 800
Total Contribution Margin 2400000 1600000 1600000
Total Contribution Margin 5600000
Total Fixed Cost 5600000
Net Income                -  
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