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guapka [62]
3 years ago
8

EA11.

Business
1 answer:
stich3 [128]3 years ago
6 0

Answer:

The question is incomplete. The complete question is given as follows:

                  Selling Price per unit Variable  cost per unit

Product                                 $                          $

Snowboards                          320.00                170.00

Skis                                  400.00                225.00

Poles                                     50.00                 20.00

Answer:  Snowboard-840 units, Ski- 360 units and Poles-240 units

Explanation:

The break-even point is the activity level where the total cost of a business is the same as its total revenue. At this point, the business makes neither profit nor loss. This analysis helps a firm to know how many clients to be served or units to be produced in order to cover its fixed costs.

A break-even point can be calculated using the following relationships below:

A single-product scenario

Break-even point (in units) = Total general fixed costs/(selling price -Variable cost)

Multiple-products scenario

Break-even point (in units) = Total general fixed costs/ average contribution per unit.

Total general fixed costs are period costs which remain the same within a given activity level, and cannot be said to be incurred for a specific product.

We will use use the second formula, because there are multiple product

                                           Snow               Ski              Poles  

                                                $                    $                    $                  

Selling price                           320                400              50              

Variable cost                          <u>(170)</u>               <u>(225)</u>           <u> (20)</u>

Contribution(SP-VC)               150                     175           30

Cont. from a mix(cont × unit)  1050                525              60

Average contribution = (1050+525+60)/(7+3+2)

                                    = $136.25

Break-even point (in units)  = $196200/$136.25

                                    = 1,440 units.

Salvador will need to sell a total of 1,440 units in following mix to break-even:

Snowboards= (7/12) *× 1,440= 840 units

Skis=   (3/12) × 1,440= 360 units

 Poles   =  (2/12) ×1.440= 240 units

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