Question

Benjamin co. has three products a, b, and c, and its fixed costs are $67,200. the sales mix for its products are 3 units of a, 4 units of b, and 1 unit of
c. information about the three products follows: a b c projected sales in dollars $192,000 $192,000 $64,000 selling price per unit $55.00 $30.50 $32.00 contribution margin ratio 30% 25% 50% (a) calculate the company's break-even point in composite units and sales dollars. (b) calculate the number of units of each individual product to be sold at the break-even point.

Answer 1

Preliminary calculations:3 units of A at $ 55.00 each - $ 165.004 units of B at $ 30.50 each - $ 122.001 unit of C at $ 32.00 each - $ 32.00Selling price of a composite unit - $ 319.00
Contribution margin of A ($ 165.00 x 30%) - $ 49.50Contribution margin of B ($ 122.00 x 25%) - $ 30.50Contribution margin of C ($ 40 x 50%) - $ 20.00Contribution margin of composite unit - $ 100.00
(a) Break-even point in composite units = $ 67,200 / $ 100 = 672 composite unitsBreak-even point in sales dollars = 672 x $ 319 = $ 214,368.00
(b) At break-even point,672 x 3 = 2,016 units of A672 x 4 = 2,688 units of B672 x 1 = 672 units of C