Question

2 pts Water Rockets Company has provided the following information regarding the two products that it sells: Sales price per unit Variable cost per unit Jet Boats Ski Boats S20, 5,000 Annual fixed costs are $290,000. How many units must be sold in order for Water Rockets to breakeven, assuming the company sells five jet boats for every two ski boats sold? (Round intermediary dollar amounts to the nearest dollar and round unit amounts up to the next whole unit.) O 24 jet boats and 59 ski boats O 73 jet boats and 30 ski boats O 53 jet boats and 21 ski boats O 59 jet boats and 24 ski boats

Answer 1

	Jet boats	ski boats
Sales price	8,000	20,000
(-)variable cost	(5,000)	(15,000)
Contribution	3,000	5,000

Weighted contribution =

($3,000 × 5 jet boats) + ($5,000 × 2 ski boats) = $25,000

Weights = 5 jet boats + 2 ski boats = 7 boats

Weighted-average contribution margin per unit =

$25,000 / 7 boats = $3,571 per boat

Required sales in units =

(Fixed costs + Target profit) / Contribution margin per unit

Required sales in units = ($290,000 + 0) / $3,571 per boat

= 82 boats

82 boats in the ratio of 5:2 are 59 jet boats and 24 ski boats.

therefore answer is option(d)

59 jet boats and 24 ski boats