Question

Taylor Company produces two products, X and Y, which account for 70% and 30%, respectively, of total sales dollars. Contribution margin ratios are 60% for X and 30% for Y. Total fixed costs are $140,000. What is Taylor's break-even point in sales dollars? (Note: Round answer to the nearest dollar.)

Answer 1

Answer:

BEP $274,509.8

Explanation:

Product X sales weight 70%

Product Y sales weight 30%

X CMR 0.60 x 70% sales weight = 0.42

Y CMR 0.30 x 30% sales weight product Y = 0.09

Contribution mix 0.51

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$\frac{Fixed\:Cost}{Contribution \:Margin \:Ratio} = Break\: Even\: Point_{dollars}$

140,000 fixed cost / 0.51 = 274,509.8