Question

The following information is for the Jeffries Corporation: Product A: Revenue $13.00 Variable Cost $10.00 Product B: Revenue $39.00 Variable Cost $18.00 Total fixed costs $301,500 What is the breakeven point, assuming the sales mix consists of three units of Product A and one unit of Product B? O A. 30,150 units of A and 10,050 units of B 100,500 units of A and 0 units of B B. O c. 10,050 units of A and 30,150 units of B D. 7,731 units of A and 2,577 units of B

Answer 1

Contribution margin of A = 13 - 10 = 3

Contribution margin of B = 39 - 18 = 21

Weighted average contribution margin per unit

= [(3*3/4)+(21*1/4)] = 7.50

Breakeven point = Fixed cost/Weighted average contribution margin per unit = 301,500/7.50 = 40,200 units

A = 40,200 * 3/4 = 30,150

B = 40,200 * 1/4 = 10,050

Option A is the answer