Question

The kenosha company has three product lines of beer mugslong dash​a, ​b, and clong dashwith contribution margins of $ 5​, $ 4​, and $ 3​, respectively. the president foresees sales of 175 comma 000 units in the coming​ period, consisting of 25 comma 000 units of​ a, 100 comma 000 units of​ b, and 50 comma 000 units of c. the​ company's fixed costs for the period are $ 351 comma 000. what is the company's breakeven point in units, assuming that the given sales mix is maintained?

Answer 1

Answer:

break even point in units:

• a = 11,700
• b = 46,800
• c = 35,100

Explanation:

beer mugs          contribution margin         expected sales

a                                $5                                   25,000

b                                $4                                  100,000

c                                $3                                   50,000

fixed costs = $351,000

if the sales proportion remains the same, we can assume a bundle of products = 1a + 4b + 3c (1 for every 25,000 units) whose contribution margin = $5 + $16 + $9 = $30

break even point = fixed costs / bundle's contribution margin = $351,000 / $30 = 11,700 bundles

break even point in units:

a = 11,700

b = 11,700 x 4 = 46,800

c = 11,700 x 3 = 35,100