Kennedy Co.sells two products, Arks and Bins.Last year, Kennedy sold 32,000 units of Arks and 18,000 units of Bins.Related data are: $\begin{array}{cccc}
& \text { Unit } & \text { Unit } & \text { Unit } \
& \text { Selling Variable } & \text { Contribution } \
\text { Product } & \text { Price } & \text { Cost } & \text { Margin } \
\hline\text { Arks } & \$ 80 & \$ 20 & \$ 60 \
\text { Bins } & 120 & 40 & 80
\end{array}$ ? Assuming that last year's fixed costs totaled $910,000, what was Kennedy's break-even point in units?

Question

Kennedy Co.sells two products, Arks and Bins.Last year, Kennedy sold 32,000 units of Arks and 18,000 units of Bins.Related data are: $\begin{array}{cccc} 
& \text { Unit } & \text { Unit } & \text { Unit } \
& \text { Selling Variable } & \text { Contribution } \
\text { Product } & \text { Price } & \text { Cost } & \text { Margin } \
\hline\text { Arks } & \$ 80 & \$ 20 & \$ 60 \
\text { Bins } & 120 & 40 & 80
\end{array}$ ? Assuming that last year's fixed costs totaled $910,000, what was Kennedy's break-even point in units?

Quizplus · Accepted Answer

To calculate the break-even point in units, we first need to find the weighted average contribution margin per unit. This is done by calculating the total contribution margin for each product and then dividing by the total units sold.For Arks: $32,000 \text{ units} \times \$60 = \$1,920,000$For Bins: $18,000 \text{ units} \times \$80 = \$1,440,000$Total contribution margin = \$1,920,000 + \$1,440,000 = \$3,360,000Total units sold = 32,000 + 18,000 = 50,000 unitsWeighted average contribution margin per unit = $\frac{\$3,360,000}{50,000} = \$67.20$Fixed costs = \$910,000Break-even point in units = $\frac{\text{Fixed Costs}}{\text{Weighted Average Contribution Margin per Unit}} = \frac{\$910,000}{\$67.20} = 13,542 \text{ units}$

Kennedy Co ? Assuming That Last Year's Fixed Costs Totaled $910,000, What