The following data pertain to the three products produced by Beta Corporation: $\begin{array}{lccc}&A&B&C\
\text { Selling price per unit } & \$ 6.00 & \$ 8.00 & \$ 9.00 \
\text { Variable costs per unit } & 4.00 & 4.00 & 4.00 \
\text { Contribution margin per unit } & \$ 2.00 & \$ 4.00 & \$ 5.00
\end{array}$
Fixed costs are $77,000 per month.
Twenty percent of all units sold are Product A, fifty-five percent are Product B, and twenty-five percent are Product C.
What is the monthly break-even point for total units?

Question

Quizplus · Accepted Answer

The monthly break-even point for total units is 32,000 units. This is calculated by dividing the fixed costs by the contribution margin per unit. The contribution margin per unit is the difference between the selling price per unit and the variable costs per unit. In this case, the contribution margin per unit is $2.00 for Product A, $4.00 for Product B, and $5.00 for Product C. The weighted average contribution margin per unit is $3.80. Therefore, the monthly break-even point for total units is 77,000 / 3.80 = 20,263 units.

The Following Data Pertain to the Three Products Produced by Beta