Question

Gabe Industries sells two​ products, Basic models and Deluxe models. Basic models sell for $ 45 per unit with variable costs of $ 35 per unit. Deluxe models sell for $ 49 per unit with variable costs of $ 40 per unit. Total fixed costs for the company are $ 617. Gabe Industries typically sells four Basic models for every Deluxe model. What is the breakeven point for Basic models and Deluxe​ models? (Round any intermediary calculations to the nearest cent and your final answers to the nearest whole​ unit.)A. 35 units of Basic; 46 units of Deluxe B. 11 units of Basic; 55 units of Deluxe C. 55 units of Basic; 11 units of Deluxe D. 46 units of Basic; 35 units of Deluxe

Answer 1

The answer is: 50 basic units and 13 deluxe units

Step-by-step explanation:

Basic model Deluxe model Total

Sales price $45 $49

Variable costs $35 $40

Contribution margin $10 $9

× Sales Mix 4 1 5

Total contribution m. $40 $9 $49

Weighted contribution margin = total contribution margin / units = $49 / 5

Weighted contribution margin = $9.8

Break even point = total fixed costs / weighted contribution margin

Break even point = $617 / $9.8 = 62.96 units ≈ 63 units

• basic units = 63 x 80% = 50.4 ≈ 50 units
• deluxe units = 63 x 20% = 12.6 ≈ 13 units