Question

Barclay enterprises manufactures and sells three distinct styles of bicycles: the youth model sells for $600 and has a unit contribution margin of $390; the adult model sells for $980 and has a unit contribution margin of $637; and the recreational model sells for $1,380 and has a unit contribution margin of $897. the company's sales mix includes: 5 youth models; 9 adult models; and 6 recreational models. if the firm's annual fixed costs total $9,360,000, calculate the firm's break-even point in total sales dollars.

Answer 1

$14,400,000

Step-by-step explanation:

For that sales mix, the total contribution margin will be ...

5($390) +9(637) +6(897) = $13,065

The selling price of that mix is ...

5($600) +9(980) +6(1380) = $20,100

Then the sales required to produce a contribution margin of $9,360,000 will be ...

20,100/13065 × $9,360,000 = $14,400,000