Question

Mott Company's sales mix is 3 units of A, 2 units of B, and 1 unit of C. Selling prices for each product are $37, $47, and $57, respectively Variable costs per unit are $30, $31, and $34, respectively. Fixed costs are $456,000. What is the break-even point in composite units?

a) 1.239 composite units
b) 1357 composite units
c) 2763 composite units
d) 4,606 composite units.

Answer 1

6,000 composite units

Step-by-step explanation:

A B C Total

Selling price per unit 37 47 57

Less: Variable cost per unit 30 31 34

CM per unit 7 16 23

Sales mix 3 2 1

CM per sales mix 21 32 23 76

Break even in composite unit = Fixed cost / CM per sales mix

Break even in composite unit = $456,000 / 76

Break even in composite unit = 6,000