Question

Summit Company manufactures and sells three products; X, Y, and Z. Last year sales of these products were 20,000 units of X, 30,000 units of Y and 50,000 units of Z. The unit contribution margins are $5 for X, $4 for Y, and $3 for Z. Assuming the product mix remains the same and that fixed costs are $222,000, how many units of X must Summit sell to break even?

Multiple Choice

• 10,000

• 12,000

• 22,200

• 44,400

• None of these.

Answer 1

Answer

· Working

		X	Y	Z	Total
A	Sales units	$20,000	$30,000	$50,000	$100,000
B = A/100000	Sales Mix % of total	20%	30%	50%	100%
C	Unit contribution margin	$5.00	$4.00	$3.00
D = B x C	Weighted Average unit CM	$1.00	$1.20	$1.50	$3.70
E	Fixed Cost				$222,000
F = E/D	Total Break even in units				60000
G = F x B	Break even of individual product	12000 [Answer]	18000	30000

· Correct Answer = Option #2: 12000 units