Birch Manufacturers has provided the following information regarding the two products that it sells: $$\begin{array} { | l | r | r | }
\hline & \text { Jet Boats } & \text { Ski Boats } \
\hline \text { Sales price per unit } & \$ 10,000 & \$ 24,000 \
\hline \text { Variable cost per unit } & \$ 4800 & \$ 18,000 \
\hline
\end{array}$$ Annual fixed costs are $300,000.
How many units must be sold in order for Birch to break even,assuming that Birch sells five jet boats for every two ski boats sold? (Round any intermediate calculations to two decimal places,and your final answer to the nearest unit.)

Question

Birch Manufacturers has provided the following information regarding the two products that it sells: $$\begin{array} { | l | r | r | } 
\hline & \text { Jet Boats } & \text { Ski Boats } \
\hline \text { Sales price per unit } & \$ 10,000 & \$ 24,000 \
\hline \text { Variable cost per unit } & \$ 4800 & \$ 18,000 \
\hline
\end{array}$$ Annual fixed costs are $300,000.
How many units must be sold in order for Birch to break even,assuming that Birch sells five jet boats for every two ski boats sold? (Round any intermediate calculations to two decimal places,and your final answer to the nearest unit.)

Quizplus · Accepted Answer

To find the break-even point, calculate the contribution margin per unit for each product and use the sales mix to determine the weighted average contribution margin. Then, divide the total fixed costs by this weighted average to find the total number of units needed to break even. The sales mix ratio is 5 jet boats to 2 ski boats.

Birch Manufacturers Has Provided the Following Information Regarding the Two