Sales Mix and Break-Even Analysis Michael Company has fixed costs of $496,640. The unit selling price,...

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Sales Mix and Break-Even Analysis Michael Company has fixed costs of $496,640. The unit selling price,...

Sales Mix and Break-Even Analysis

Michael Company has fixed costs of $496,640. The unit selling price, variable cost per unit, and contribution margin per unit for the company’s two products follow:

Product Model	Selling Price	Variable Cost per Unit	Contribution Margin per Unit
Yankee	$180	$80	$100
Zoro	140	120	20

The sales mix for products Yankee and Zoro is 55% and 45%, respectively. Determine the break-even point in units of Yankee and Zoro.

a. Product Model Yankee units

b. Product Model Zoro units

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Answer 1

Answer #1

Weighted average contribution margin per unit

= (100*55%) + (20*45%) = 64

Overall break even point = Fixed cost/weighted average contribution margin

= 496,640/64 = 7760 units

Product model Yankee units = (7760*55%)	4268
Product model Zoro units = (7760*45%)	3492

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Answer 2

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