Question

Pittsburg Steel Manufacturing has a weighted-average unit contribution margin of $20 for its two products, Standard and Supreme. Expected sales for Pittsburg Steel are 40,000 Standard and 60,000 Supreme. Fixed expenses are $1,800,000.4. How many Standards would Pittsburg Steel sell at the break-even point?A) 36,000B)54,000C)60,000D) 90,000

Answer 1

Answer:

The correct answer is A.

Explanation:

Giving the following information:

The weighted-average unit contribution margin of $20.

Expected sales for Pittsburg Steel are 40,000 Standard and 60,000 Supreme.

Fixed expenses are $1,800,000

First, we need to calculate the break-even point in units for the whole company.

Break-even point (units)= Total fixed costs / Weighted average contribution margin ratio

Break-even point (units)= 1,800,000/20

Break-even point (units)=90,000 units

Now, for each product:

Standard= (40,000/100,000)*90,000= 36,000 units

Supreme= (60,000/100,000)*90,000= 54,000 units