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Nana76 [90]
3 years ago
7

Mayfield Company sells two products, Blue models and Plaid models. Blue models sell for $43 per unit with variable costs of $30

per unit. Plaid models sell for $52 per unit with variable costs of $45 per unit. Total fixed costs for the company are $9200. Mayfield Company typically sells four Blue models for every five Plaid models. What is the breakeven point in total units
Business
1 answer:
alekssr [168]3 years ago
6 0

Answer:

Break-even point in total units=  951.7units

Explanation:

<em>Break-even point is the level of activity at which a firm must operate such that its total revenue will equal its total costs. At this point, the company makes no profit or loss</em>.

It is calculated using this formula:

<em>Break-even point (in units) = Fixed cost/ average contribution per unit</em>

                                                          <em>  Blue                          Plaid</em>

Contribution per unit                43-30 = 13                   52-45 = 7

<em>Average contribution per unit </em>

= ( (13× 4) + (7×5) )/9

= $ 9.66 per unit

<em>Break-even point in total units</em>

= $9200/$ 9.66

= 951.7units

Break-even point in total units= 951.7units

           

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