Question

US-Mobile manufactures and sells two products, tablet computers and smartphones, in the ratio of 5:3. Fixed costs are $105,000, and the contribution margin per composite unit is $125. What number of each type of product is sold at the break-even point

Answer 1

Tablets = 525 units

Smartphones = 315 units

Step-by-step explanation:

The break-even point (BEP) is the quantity of each product to be sold such that the business makes no profit or loss.

The beak-even point can be determined as follows:

Break-even point = total fixed cost / average contribution per unit

Break-even point (units ) = $105,000/125 per unit

= 840 units

The 840 should be sold in the proportion stated below:

Tablets = 5/(5+3)× 840 =525 units

Smartphones = 3/(5+3) × 840 = 315 units