Moonbeam Corporation Moonbeam Corporation manufactures and sells two products: A and B The operating results of the company are as follows: $\begin{array}{lll}
&\text{Product A}&\text{Product B}\\hline
\text { Sales in units } & 2,000 & 3,000 \
\text { Sales price per unit } & \$ 10 & \$ 5 \
\text { Variable costs per unit } & 7 & 3
\end{array}$ In addition,the company incurred total fixed costs in the amount of $9,000.
Refer to Moonbeam Corporation.How many total units would the company have needed to sell to break even?

Question

Quizplus · Accepted Answer

To find the break-even point in units, calculate the weighted average contribution margin per unit and divide the total fixed costs by this margin. The contribution margin per unit for Product A is $3 ($10 - $7) and for Product B is $2 ($5 - $3). The sales mix is 2:3, so the weighted average contribution margin is ($3 * 2/5) + ($2 * 3/5) = $2.4. The break-even point is $9,000 / $2.4 = 3,750 units.

Moonbeam Corporation Moonbeam Corporation Manufactures and Sells Two Products: a and B