Question

Brad Swifty Corporation sells two types of computers; one is designed for audio applications and the other for video applications. Swifty incurs $301500 in fixed costs.
Per-unit data on the two products is presented blow:

Unit data	Audio computer	Video computer
Selling price	$1490	$1770
Variable costs	1130	1170
Contribution margin	$360	$600
Sales mix	70%	30%

The weighted-average contribution margin is

Answer 1

Weighted Average contribution margin

= Contribution margin of Audio Computer* Sales mix Audio computer % + Contribution margin of Video Computer* Sales mix Video Computer %

= $ 360 * 70% + $ 600 * 30%

= $ 252 + $ 180 = $ 432

Since the fixed cost is $ 301500

Therefore the breakeven units = $ 301500 / $ 432 = 697.9167 units rounded off to 698 units

If the sales mix remains constant then the units must be sold in correct proportions as follows:

Audio Computer = 698 units * 70% = 488.60units

Video Computer = 698 units * 30% = 209.40 units