Question

Sales mix and break-even analysis

Conley Company has fixed costs of $15,525,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products follow:

Product	Selling Price		Variable Cost per Unit			Contribution Margin per Unit
Yankee	$175		$100			$75
Zoro	255		180			75

The sales mix for products Yankee and Zoro is 20% and 80%, respectively.

Determine the break-even point in units of Yankee and Zoro of the overall (total) product, E. If required, round your answers to the nearest whole number.

Product Yankee: _______ units

Product Zoro: _______ units

Answer 1

	Yankee (a)	Zoro (b)	Total (a + b)
Contribution Margin per unit (a)	$75	$75
Sales Mix (b)	20%	80%
Weighted average contribution margin per unit (c = a*b)	$15	$60	$75
Total Fixed Costs (d)			$15,525,000
Company wide break-even point (d / c)			207,000
Break-even point for each product based on sales mix (207,000*20/100); (207,000*80/100)	41,400	165,600
Therefore, break-even point for Yankee is 41,400 units and fo Zoro is 165,000 units.