Question

Assume that Corn Co. sold 7,300 units of Product A and 2,700 units of Product B during the past year. The unit contribution margins for Products A and B are $34 and $64, respectively. Corn has fixed costs of $343,000. The break-even point in units is

Answer 1

8,147 units

Step-by-step explanation:

The computation of the break even point in units is shown below:

Break even point in units is

= Fixed cost ÷ weighted contribution margin

where,

The Fixed cost is $343,000

And, weighted contribution margin is

= (7,300 units × $34 + 2,700 units × $64) ÷ (7,300 units + 2,700 units)

= ($248,200 + $172,800) ÷ (10,000 units)

= $42.1

Now the break even point in units is

= $343,000 ÷ $42.1

= 8,147 units