Question

Garden Tools, Enterprises manufactures chainsaws, lawnmowers, and weed-trimmers. Its sales mix and unit contribution margin are as follows. Sales Mix Unit Contribution Margin Chainsaws Lawnmowers 30% 20% 50% $40.00 $30.00 $50.00 Weed-trimmers Garden Tools has fixed costs of $4,200,000 Compute the number of units of each product that Garden Tools must sell in order to break-even Under this product mix.

Answer 1

Break even under production mix
Particulars	Chainsaws	Lawnmowers	Weed- trimmers	Total
Sales mix	30%	20%	50%	100%
Contribution Margin per unit	40	30	50
Fixed cost proportion	1,260,000	840,000	2,100,000	4,200,000
(Based on sales mix)
Units to produce to absorb fixed cost	31,500	28,000	42,000
(Fixed cost/contribution per unit)
Cross check
Break even sales	31500	28000	42000
Contribution Margin	40	30	50
Contibution	1,260,000	840,000	2,100,000	4,200,000
Less - Fixed cost				4,200,000
Gain/loss				-

* Contribution margin is used to arrive at sales mix as no sale price is given