Question

ABC Company sells three products, X, Y and Z. The weighted average contribution margin for all three products is $3.05 per unit. ABC's total fixed costs are $35,000. Sales mix percentages are :

Answer 1

Answer:

Break-even point (units)= Total fixed costs / Weighted average contribution margin

Explanation:

Giving the following information:

The weighted average contribution margin for all three products is $3.05 per unit. ABC's total fixed costs are $35,000

With the information provided, we can only calculate the break-even point in units for the whole company using the following formula:

Break-even point (units)= Total fixed costs / Weighted average contribution margin

Break-even point (units)= 35,000/3.05

Break-even point (units)= 11,475

Now, imagine the following sales mix:

X= 0.25

Y=0.40

Z=0.35

We can determine the number of units for each product:

X= 11,475*0.25= 2,869

Y= 11,475*0.4= 4,590

Z= 11,475*0.35= 4,016