A firm has the following fact pattern for its three product lines. Product A Product B...
A firm has the following fact pattern for its three product lines.
| Product A | Product B | Product C | |
| Sales Mix | 2 | 1 | 5 |
| Sales Price Per Unit | $84 | $40 | $22 |
| Variable Cost Per Unit | $28 | $26 | $3 |
The firm has fixed costs of $1,500,000 per period. How many units of Product C does the firm need to produce to break even?
At the end of your calculations, round up to the nearest whole unit of Product C.
Homework Answers
Weighted average contribution margin
= Product A (84-28)*2/8 + Product B (40-26)*1/8 + Product C (22-3)*5/8
= 14 + 1.75 + 11.875
= 27.625
Breakeven point in total = Fixed cost/Weighted average Contribution margin
= 1,500,000/27.625
= 54,299 units
Units of C = 54,299 * 5/8
= 33,937 units
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