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

 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

 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 -