Answer:
A. 58 jet boats and 23 ski boats
Explanation:
Break even point is the level of activity at which a firm neither makes a profit nor a loss.
First determine the sales mix :
Note : Birch sells five jet boats for every two ski boats sold
thus the mix is 5:2
Then calculate the contribution per batch
Jet Boats = $8,000 - $6,000 =$2,000
Ski Boats = $24,000 - $ 16,000 = $8,000
Total Contribution per batch = ((5×$2,000) + (2 ×$8,000))
= $ 26,000
Calculate the batch contribution
Break - even Point = Fixed Cost / Contribution per batch
= $300,000 / ((5×$2,000) + (2 ×$8,000))
= $300,000 / $ 26,000
= 11.54
Use the sales mix to determine the units to break even in the batch
Jet Boats = 11.54 × 5
= 57,7
= 58
Ski Boats = 11.54 × 2
= 23,08
= 23
Thus the units sold to break even would be : 58 jet boats and 23 ski boats
