Question

QUESTION 7 The Pride Company sells three products in a ratio 2:2:6. The contribution margins are $10, $25, $30, respectively. Total fixed costs are $120,000. What is the breakeven point in total number of units? O 5,000 O 4,000 O 4,800 O 5,200 QUESTION 8 Rickie Fowler produces extremely high quality golf shirts with Dri-Fit technology that sell for $120.00 each. The total fixed costs for a month are $350,000. The variable costs per shirt are $50.00 Find the break-even point in sales units for Rickie. O 5,000 shirts O 4,000 shirts O 4,500 shirts O 3,000 shirts

Answer 1

Solution to QUESTION-7

Weighted average contribution margin

Weighted average contribution margin = [$10.00 x 2/10] + [$25.00 x 2/10] + [$30.00 x 6/10]

= $2.00 + $5.00 + $18.00

= $25.00 per unit

Therefore, the break-even point in units = Total fixed costs / Contribution margin per unit

= $120,000 / $25.00 per unit

= 4,800 Units

Solution to QUESTION-8

The break-even point in units = Total fixed costs / Contribution margin per unit

= Total fixed costs / [Selling price per unit – Variable cost per unit]

= $350,000 / [$120.00 per unit - $50.00 per unit]

= $350,000 / $70.00 per unit

= 5,000 Units