Assuming a constant mix of 3 units of Zip for every 1 unit of Zap, a selling price of $21.60 for Zip and $28.80 for Zap, variable costs per unit of $14.40 for Zip and $16.80 for Zap, and total fixed costs of $53,760, the break?even point in units would be _____.
A)4,800 units of Zip and 1,600 units of Zap
B)1,200 units of Zip and 400 units of Zap
C)1,600 units of Zip and 4,800 units of Zap
D)40,320 units of Zip and 13,440 units of Zap

Question

Quizplus · Accepted Answer

To find the break-even point, calculate the contribution margin per unit for the mix and divide the total fixed costs by this margin. The contribution margin for Zip is $7.20 ($21.60 - $14.40) and for Zap is $12.00 ($28.80 - $16.80). For the mix, the contribution margin is (3 * $7.20 + 1 * $12.00) = $33.60. The break-even point in terms of the mix is $53,760 / $33.60 = 1,600 mixes. This corresponds to 4,800 units of Zip and 1,600 units of Zap.

Assuming a Constant Mix of 3 Units of Zip for Every