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3 years ago

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 (170) (225) (20)

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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3 years ago

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