Question

Bonita Industries has a weighted-average unit contribution margin of $30 for its two products, Standard and Supreme. Expected sales for Bonita are 20000 Standard and 80000 Supreme. Fixed expenses are $2100000. How many Standards would Bonita sell at the break-even point

Answer 1

70,000 units

Explanation:

Step 1 : Determine the Sales Mix

Standard : Supreme

20000 : 80000

1 : 4

Step 2 : Determine the Overall Break even Point

Break even Point = Fixed Cost ÷ Contribution per unit

= $2100000÷ $30

= 70,000

Step 3 : Determine break-even point for Standards

Standards Break even point = 70,000 x 1

= 70,000 units