Use the following information for items
Brad Sherwood Corporation sells two types of computers; one is designed for audio applications and the other for video applications.Sherwood incurs $300,125 in fixed costs.
$\text { Per-unit data on the two products is presented blow: }$
$\begin{array}{llcc}
\underline{\text { Unit data } } &\underline{\text { Audio computer } }&\underline{ \text { Video computer }}\
\text {Selling price } &\$1,500&\$1,750\
\text { Variable costs } &\underline{1,100}&\underline{1,200}\
\text { Contribution margin }& \underline{\$400}&\underline{\$550}\
\text { Salses mix } &75\%&25\%\

\end{array}$

-How many audio computers will be sold at the break-even point?

Question

Use the following information for items 
Brad Sherwood Corporation sells two types of computers; one is designed for audio applications and the other for video applications.Sherwood incurs $300,125 in fixed costs.
 $\text { Per-unit data on the two products is presented blow: }$
$\begin{array}{llcc}
  \underline{\text { Unit data } } &\underline{\text { Audio computer } }&\underline{ \text { Video computer }}\
 \text {Selling price  } &\$1,500&\$1,750\
 \text {  Variable costs  } &\underline{1,100}&\underline{1,200}\
 \text { Contribution margin }& \underline{\$400}&\underline{\$550}\
 \text { Salses mix } &75\%&25\%\

\end{array}$

-How many audio computers will be sold at the break-even point?

Quizplus · Accepted Answer

To find the break-even point in units for a company selling multiple products, we use the weighted average contribution margin (WACM) approach. First, calculate the WACM using the sales mix and the contribution margin for each product. Then, divide the total fixed costs by the WACM to find the total number of units (combined) needed to break even. Finally, apply the sales mix to find the number of units for each product.1. Calculate the weighted average contribution margin (WACM):$$WACM = (75\% \times \$400) + (25\% \times \$550) = \$300 + \$137.50 = \$437.50$$2. Calculate the total units needed to break even:$$Total\ Units = \frac{Total\ Fixed\ Costs}{WACM} = \frac{\$300,125}{\$437.50} = 686$$3. Calculate the number of audio computers needed to break even (using the sales mix):$$Audio\ Computers = 686 \times 75\% = 514.5$$Since we cannot sell half a computer, we round up to the nearest whole number, which is 515 audio computers needed to break even.

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Use the Following Information for Items
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