Question

Question 4 Sheridan Industries sells two electrical components with the following characteristics. Fixed costs for the company are $472,000 per year. Sales price Variable cost Sales volume XL-709 $11.00 7.00 94,400 units CD-918 $26.00 18.00 141,600 units (a) * Your answer is incorrect. Try again. How many units of each product must Sheridan Industries sell in order to break even? (Round answers to 0 decimal places, e.g. 25,000.) XL-709 CD-918 T 118000 59000 Break even units Click if you would like to Show Work for this question: Open Show Work

Answer 1

Break even units XL - 709 CD - 918 29,500 44,250 Working Notes Sales Units mix ratio electrical components = 94.400 : 141,600 = 1 : 1.5 By using equation method XL-790 sold units assumed as X At break even point profit is Zero so Operating Income = Contribution margin of XL-709 + Contribution margin of CD-918 - Fixed Cost S0 = ($11-$7)X + ($26-$18)1.5X - $472.000 $472,000 = $4X +12x 16X = $472.000 X = $472,000/16 = 29,500 XL-709 Break even units = 29,500 units CD-918 Break Even units = 29,500*1.5 = 44,250 units