Question

Data related to the expected sales of laptops and tablets for Tech Products Inc. for the current year, which is typical of recent years, are as follows: Products Unit Selling Price Unit Variable Cost Sales Mix Laptops $1,000 $500 40% Tablets 600 300 60% The estimated fixed costs for the current year are $3,192,000. Required: 1. Determine the estimated units of sales of the overall (total) product, E, necessary to reach the break-even point for the current year.

Answer 1

Break-even point (units)= 8,400

Step-by-step explanation:

Giving the following information:

Laptops $1,000 $500 40%

Tablets 600 300 60%

Fixed costs= $3,192,000

To calculate the break-even point for the whole company, we need to use the following formula:

Break-even point (units)= Total fixed costs / Weighted average contribution margin

Weighted average contribution margin= (weighted average selling price - weighted average unitary variable cost)

Weighted average contribution margin= (0.4*1.000 + 0.6*600) - (0.4*500 + 0.6*300)

Weighted average contribution margin= $380

Break-even point (units)= 3,192,000 / 380

Break-even point (units)= 8,400