McCoy Brothers manufactures and sells two products, A and Z in the ratio of 4:2. Product...
McCoy Brothers manufactures and sells two products, A and Z in the ratio of 4:2. Product A sells for $75; Z sells for $95. Variable costs for product A are $35; for Z $40. Fixed costs are $418,500. Compute the number of units of Product Z McCoy must sell to break even.
Multiple Choice
-
9,300.
-
6,200.
-
1,550.
-
3,100.
-
6,750.
Homework Answers
Contribution Margin
Of A = 75-35 = 40
Of Z = 95-40 = 55
Weighted average contribution margin
= (40*4/6) + (55*2/6)
= 45
Breakeven sales = Fixed cost /Weighted average contribution margin
= 418,500/45
= 9300
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