Question

Coronado Industries sells two types of computer hard drives. The sales mix is 30% (Q-Drive) and 70% (Q-Drive Plus). Q-Drive has variable costs per unit of $120 and a selling price of $180. Q-Drive Plus has variable costs per unit of $135 and a selling price of $225. Coronado’s fixed costs are $1255500. How many units of Q-Drive would be sold at the break-even point?

Answer 1

Answer:

Break even units of Q-Drive = 4,650 units

Explanation:

To find break-even in sales ratio we have 3 units of Q Drive and 7 units of Q Plus Drive.

Calculating contribution per unit = Sales - Variable cost

Q Drive = $180 - $120 = $60

Q plus drive = $225 - $135 = $90

Contribution per sales mix = 3 $\times$ $60 + 7 $\times$ $90

= $180 + $630 = $810

Break even point in units = Fixed cost/ contribution per unit

Here firstly we will calculate contribution per sales mix = $1,255,500/$810 = 1,550 sales mix, as each sales mix has 3 units of Q-Drive, we have

Break even units of Q-Drive

Therefore units of Q-Drive = 1,550 $\times$ 3 = 4,650 units