Question

Presented is information for Stafford Company's three products.

	A	B	C
Unit selling price	$6	$8	$8
Unit variable costs	(4)	(5)	(3)
Unit contribution margin	$2	$3	$5

With monthly fixed costs of $143,000, the company sells two units of A for each unit of B and three units of B for each unit of C.

Determine the unit sales of product A at the monthly break-even point.

Answer 1

33,000 units
Calculation of Sales Mix:
A:B:C = 6:3:1
Calculation of Break Even Point:
Break Even Point =	Fixed Cost / (Weighted Average contribution Margin)
=	$143,000 / ($2 x 0.6 + $3 x 0.3 + $5 x .01)
=	$143,000 / $2.6
=	55,000
Units Sales of Product A at Break Even Point = 55,000 x 0.6 = 33,000 units