Victoria Company produces two products, X and Y, which account for 60 percent and 40 percent, respectively, of total sales dollars. Contribution margin ratios are 50 percent for X and 25 percent for Y. Total fixed costs are $120,000. What is Patricia's break-even point in sales dollars?

Question

Quizplus · Accepted Answer

The break-even point in sales dollars can be calculated using the weighted-average contribution margin ratio. First, calculate the weighted-average contribution margin ratio: (0.60 * 0.50) + (0.40 * 0.25) = 0.30 + 0.10 = 0.40. Then, divide the total fixed costs by this ratio: $120,000 / 0.40 = $300,000.

Victoria Company Produces Two Products, X and Y, Which Account