Question

Show All Your Works How You Do It: Fill out 2 white blanks for "How many of each type of...to breakeven? Peppy Quadcopters plans to sell a standard quadcopter (toy drone) for $70 and a deluxe quadcopter for $100. Peppy purchases the standard quadcopter for $50 and the deluxe quadcopter for $80. Management expects to sell two deluxe quadcopters for every three standard quadcopters. The company's monthly fixed expenses are $22,000. How many of each type of quadcopter must Peppy sell monthly to breakeven? To earn $14,000? How many of each type of quadcopter must Peppy sell monthly to breakeven? Peppy must sell standard quadcopters and deluxe quadcopters to breakeven.

Answer 1

ANs:

Calculation of weighted average contribution Margin per unit
	Standard	Deluxe	Total
Selling price per Unit	$ 70.00	$ 100.00
Deduct : Variable cost per Unit	$ 50.00	$ 80.00
Contribution Margin per Unit	$ 20.00	$ 20.00
x Number of Units sold	3	2	5
Total Contribution Margin	$ 60.00	$ 40.00	$ 100.00
Weighted Average contribution Margin per unit			$ 20.00
[Total Contribution Margin / Total Units sold]

Calculation of break even point in units
Break even point in Units = Total Fixed cost+ Break even earnings / Weighted Average contribution Margin per unit
Break even point in Units = $22000+14000/ $20= 1800 Units
Standard :Number of Units to be sold to break even = 1800 Units x [3/5] = 1080 Units
Deluxe :Number of Units to be sold to break even = 1800 Units x [2/5] = 720 Units
Peppy must sell 1080 Standard quadcopters and 720 Deluxe quadcopters to break even.