Walton Company manufactures two products. The budgeted per-unit contribution margin for each product follows:
Walton expects to incur annual fixed costs of $133,760. The relative sales mix of the products is 70 percent for Super and 30 percent for Supreme.
Required
-
Determine the total number of products (units of Super and Supreme combined) Walton must sell to break even.
-
How many units each of Super and Supreme must Walton sell to break even?
Homework Answers
| Particulars | Super | Supreme |
| A. Contribution margin | 31 | 45 |
| B. Sales mix | 70% | 30% |
| D.Weighted Contribution Margin Per Unit (Contribution margin per unit *Sales Mix) | 21.7 | 13.5 |
Part-a)
Total Units to Break Even = Fixed Cost / Total Weighted Contribution Margin Per Unit
=$133,760/(21.7+13.5)
=3,800 units
Part-b)
No of units of Super sold =3800*70%=2,660
No of units of Supreme sold =3800*30%=1,140
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