Question

Megan Company has fixed costs of $429,450. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below. Product Selling Price Variable Cost per Unit Contribution Margin per Unit Q $320 $150 $170 Z 220 180 40 The sales mix for products Q and Z is 50% and 50%, respectively. Determine the break-even point in units of Q and Z. If required, round your answers to the nearest whole number. a. Product Q fill in the blank 1 units b. Product Z fill in the blank 2 units

Answer 1

Answer:Break-even point (units)= 4,090units  ,  

a. Product Q -2,045 units

b. Product Z -2,045 units

Explanation:

Given

Product Selling Price Variable Cost per Unit Contribution Margin per Unit Q                   $320                       $150                             $170

Z                    220                          180                                 40

Using the formulae

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

But weighted Q contribution: $170 x 50%  = $ 85

weighted Z contribution:     $ 40 x 50%  = $  20

Total Mix contribution(Weighted average contribution margin)=$105

Break-even point (units)= $429,450/ $105

Break-even point (units)= 4,090units

Now, for each product:

Q= 4,090units x 50%= 2,045 units  

Z= 4,090units x 50%= 2,045 units

Therefore,

a. Product Q -2,045 units

b. Product Z -2,045 units