Question

The following information is for Winnie Company:

Product A: Revenue	$4.00
Variable Cost	$1.00
Product B: Revenue	$6.00
Variable Cost	$2.00
Total fixed costs are	40,000

What is the breakeven point assuming the sales mix consists of two units of Product A and one unit of Product B?

		2,000 units of B and 4,000 units of A
		4,025 units of B and 8,050 units of A
		2,025 units of B and 4,050 units of A
		4,000 units of B and 4,000 units of A
		4,000 units of B and 8,000 units of A

Answer 1

Answer:

Option (E) is correct Answer

N = units of product B; 2N = units of product A
($4.00 - $1.00)*2N + ($6.00 - $2.00)*N - $40,000 =0
$6N + $4N = $40,000
$10N = $40,000
N = $40,000/$10
N = 4,000 units
Product B = 4,000 units; Product A = 8,000 units