Question

Carter Co. sells two products, Arks and Bins. Last year Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are: Product Unit Selling Price Unit Variable Cost Unit Contribution Margin Arks $120 $80 $40 Bins 80 60 20 Assuming that last year's fixed costs totaled $960,000, what was Carter Co.'s break-even point in units?

Answer 1

Answer:

Carter Co.'s break-even point in units was 40000 units.

Explanation:

Total units sold = 14000 + 56000

                          = 70000

Weight of ark = 14000/70000

                      = 0.20  

weight of bins = 1 -0.20

                        = 0.80

weighted average contribution = (40 *0.20 ) + (20 *0.80 )  

                                                    = 8+ 16  

                                                    = $ 24 per unit

Break Even Point (Units) = Fixed cost /weighted average contribution

                   = 960,000 / 24  

                   = 40000 units

Therefore, Carter Co.'s break-even point in units was 40000 units.