Answer:
Break-even point (units)= 90 units
Explanation:
Giving the following information:
Large forklift:
Selling price= $80,000 per unit
Unitary variable cost= $26,000 per unit.
Small forklifts:
Selling price= $60,000 per unit
Unitary variable cost= $12,000 per unit.
Total fixed costs for the company are $4,455,000.
Sales proportion:
Large forklift= 0.25
Small forklift= 0.75
To calculate the break-even point in units, we need to use the following formula:
Break-even point (units)= Total fixed costs / Weighted average contribution margin
Weighted average contribution margin= (weighted average selling price - weighted average unitary variable cost)
Weighted average contribution margin= (0.25*80,000 + 0.75*60,000) - (0.25*26,000 + 0.75*12,000)
Weighted average contribution margin= 65,000 - 15,500= 49,500
Break-even point (units)= 4,455,000/ 49,500
Break-even point (units)= 90 units
