Question

Mott Company's sales mix is 3 units of A, 2 units of B, and 1 unit of C. Selling prices for each product are $37, $47, and $57, respectively Variable costs per unit are $30, $31, and $34, respectively. Fixed costs are $456,000. What is the break-even point in composite units?
a) 1.239 composite units
b) 1357 composite units
c) 2763 composite units
d) 4,606 composite units.

Answer 1

Answer:

6,000 composite units

Explanation:

                                                 A    B     C      Total

Selling price per unit              37   47    57  

Less: Variable cost per unit   30   31     34

CM per unit                              7     16     23  

Sales mix                                  3     2       1

CM per sales mix                    21    32    23    76

Break even in composite unit = Fixed cost / CM per sales mix

Break even in composite unit = $456,000 / 76

Break even in composite unit = 6,000