Final answer:
Friar Corporation's break-even point is 18,000 total units, composed of 4,500 units of Product A and 13,500 units of Product B. This is determined using the contribution margin per unit for each product and considering the mix of 3 units of Product B for every unit of Product A sold.
Step-by-step explanation:
To compute the break-even point for Friar Corporation, which sells two products, we need to use the contribution margin method. First, we calculate the contribution margin per unit for each product. Product A has a selling price of $112 and a variable cost of $64, so the contribution margin per unit for Product A is $112 - $64 = $48. Similarly, for Product B, with a selling price of $78 and a variable cost of $47, the contribution margin is $78 - $47 = $31.
Since Friar sells three units of Product B for every unit of Product A, we can consider a bundle of 4 units (one unit of A and three units of B). The total contribution margin for this bundle is ($48 for Product A) + (3 × $31 for Product B) = $48 + $93 = $141. To cover the fixed costs of $634,500, we need to sell a number of bundles which we calculate by dividing the fixed costs by the total contribution margin per bundle: $634,500 / $141 = 4500 bundles.
To find the total units, we multiply the number of bundles by the number of units in each bundle (since 1 bundle = 4 units): 4500 bundles × 4 units/bundle = 18,000 units. Therefore, the break-even point is 18,000 units, which consists of 4,500 units of Product A and 13,500 units of Product B.