Question

Following is the information about Eclypso Company's two products: Product X Product Y Unit selling price $10.00 $10.00 Unit variable costs: Manufacturing $ 6.00 $ 7.00 Selling 1.00 1.00 Total variable costs $ 7.00 $ 8.00 Monthly fixed costs are as follows: Manufacturing $ 90,000 Selling and administrative 50,000 Total fixed costs $140,000 What is the total monthly sales volume in units required to break even when the sales mix in units is 80% of Product X and 20% of Product Y?

Answer 1

50,000 units are required to break even

Step-by-step explanation:

Eclypso Company

Product X Product Y

Unit selling price $10.00 $10.00

Less

Unit variable costs:

Manufacturing $ 6.00 $ 7.00

Selling 1.00 1.00

Total variable costs $ 7.00 $ 8.00

Contribution Margin per unit 3 2

Monthly fixed costs are as follows:

Manufacturing $ 90,000

Selling and administrative 50,000

Total fixed costs $140,000

Weighted Contribution Margin per unit = ($3 * 80% + $ 2 * 20%)= 2.4+ 0.4=

$ 2.8

Combined Break Even Volume = Fixed Costs/ Weighted Contribution Margin Per unit

Combined Break Even Volume = $ 140,000/ 2.8=50,000