Question

Yard Tools manufactures lawnmowers, weed-trimmers, and chainsaws. Its sales mix and unit contribution margin are as follows.

		Sales Mix			Unit Contribution Margin
Lawnmowers		20	%		$29
Weed-trimmers		50	%		$20
Chainsaws		30	%		$36

Yard Tools has fixed costs of $3,857,000.

Compute the number of units of each product that Yard Tools must sell in order to break even under this product mix.

LawnmowersEnter a number of units

unitsWeed-trimmersEnter a number of units

unitsChainsawsEnter a number of units

units

Answer 1

Solution

Lawnmowers	29,000 Units
Weed-trimmers	72,500 Units
Chainsaws	43,500 Units

Working

Working		Lawnmowers	Weed-trimmers	Chainsaws	Total
C = A - B	Contribution Margin	$               29.00	$             20.00	$              36.00
D	Product Mix	20.00%	50.00%	30.00%	100.00%
E = C x D	Weighted Average Contribution Margin	$                  5.80	$             10.00	$              10.80	$      26.60

.

A	Total Fixed Cost plus profit	$ 3,857,000.00
B	Weighted Average Contribution Margin	$               26.60
C = A/B	Multi Product Break Even point	145,000
C x 20%	Lawnmowers	29,000
C x 50%	Weed-trimmers	72,500
C x 30%	Chainsaws	43,500