Question

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

Answer 1

Answer:

Break-even point in total units=  951.7units

Explanation:

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.

It is calculated using this formula:

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

                                                           Blue                          Plaid

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

Average contribution per unit

= ( (13× 4) + (7×5) )/9

= $ 9.66 per unit

Break-even point in total units

= $9200/$ 9.66

= 951.7units

Break-even point in total units= 951.7units