Question

Sales Mix and Break-Even Analysis Megan Company has fixed costs of $592,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products follow: Product Selling Price Variable Cost per Unit Contribution Margin per Unit QQ $210 $110 210 $100 100 zz 310 The sales mix for Products QQ and ZZ is 40% and 60%, respectively. Determine the break-even point in units of QQ and ZZ. If required, round your answers to the nearest whole number. a. Product QQ| units b. Product ZZ roduct zz units

Answer 1

Fixed cost = $592,000

Sales mix = Product QQ 40% and Product ZZ 60%

Weighted average contribution margin per unit = 100 x 40% + 100 x 60%

= 40 + 60

= $100

Break even point = Fixed cost/Weighted average contribution margin per unit

= 592,000/100

= 5,920

a.

Break even point (Product QQ) = 5,920 x 40%

= 2,368 units

b.

Break even point (Product ZZ) = 5,920 x 60%

= 3,552 units

a	Break even point (Product QQ)	2,368 units
b	Break even point (Product ZZ)	3,552 units

kindly give a positive rating if you are satisfied with the solution. do comment if you have any query, Thanks.