Question

Barclay Enterprises manufactures and sells three distinct styles of bicycles: the Youth model sells for $350 and has a unit contribution margin of $130; the Adult model sells for $900 and has a unit contribution margin of $475; and the Recreational model sells for $1,050 and has a unit contribution margin of $525. The company's sales mix includes: 5 Youth models; 9 Adult models; and 6 Recreational models. If the firm's annual fixed costs total $6,550,000, calculate the firm's break-even point in composite units (rounded to the nearest whole unit).a. 1380 composite units. b. 8075 composite units. c. 811 composite units.d. 406 composite units. e. 16,150 composite units.

Answer 1

Break-even point in composite units = 811 units

Step-by-step explanation:

Number of modal;

5 Youth models

9 Adult models

6 Recreational models

Annual fixed costs total = $6,550,000

Find:

Break-even point in composite units

Computation:

Mixed contribution margin = 5[130] + 9[475] + 6[525]

Mixed contribution margin = 650 + 4275 + 3150

Mixed contribution margin = $8075

Break-even point in composite units = Annual fixed costs total / Mixed contribution margin

Break-even point in composite units = 6,550,000 / 8075

Break-even point in composite units = 811 units