Question

UP Forklifts sells two​ products, large forklifts and small forklifts. A large forklift sells for $ 80 comma 000 per unit with variable costs of $ 26 comma 000 per unit. Small forklifts sell for $ 60 comma 000 per unit with variable costs of $ 12 comma 000 per unit. Total fixed costs for the company are $ 4 comma 455 comma 000. UP Forklifts typically sells one large forklift for every three smalls. What is the breakeven point in total​ units?

Answer 1

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