Question

Yard Tools manufactures lawnmowers, weed-trimmers, and chainsaws. Its sales mix and unit contribution margin are as follows. Sales Mix Unit Contribution Margin Lawnmowers 20 % $33 Weed-trimmers 50 % $22 Chainsaws 30 % $41 Yard Tools has fixed costs of $4,544,800. Compute the number of units of each product that Yard Tools must sell in order to break even under this product mix. Lawnmowers units Weed-trimmers units Chainsaws units

Answer 1

Results are below.

Step-by-step explanation:

To calculate the break-even point in units, we need to use the following formula:

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

Weighted average contribution margin= 0.2*33 + 0.5*22 + 0.3*41

Weighted average contribution margin= $29.9

Break-even point (units)= 4,544,800 / 29.9

Break-even point (units)= 152,000 units

Now, for each product:

Lawnmowers= 0.2*152,000=30,400

Weed-trimmers= 0.5*152,000= 76,000

Chainsaws= 0.3*152,000= 45,600