Question

MC Qu. 157 McCoy Brothers manufactures and sells... McCoy Brothers manufactures and sells two products, A and Z in the ratio of 5:2. Product A sells for $84; Z sells for $105. Variable costs for product A are $41; for Z $45. Fixed costs are $482,400. Compute the number of units of Product A McCoy must sell to break even.

Answer 1

7,200 units

Step-by-step explanation:

The computation of the no of units for break even for product A is given below:

But before that the contribution margin for the sales mix is

Particulars product A product Z

Selling price $84 $105

Less:

variable cost -$41 -$45

Contribution margin $43 $60

Sales mix 5 2

CM sales mix $215 $120

Total $335

Now the break even sales in total is

= $482,400 ÷ 335

= 1,440 units

Now for product A, it is

= 1,440 × 5

= 7,200 units