Briggs Tools makes 2 products, snips and cutters.Snips have a contribution margin per unit of $8.00 and cutters have a contribution margin per unit of $12.00.Briggs has annual fixed costs of $117,600.Briggs' historical sales data indicates that snips and cutters are sold in a 2 to 1 sale mix.How many snips will be sold at break-even?

Question

Quizplus · Accepted Answer

First, we need to calculate the contribution margin per unit of the product mix:

Contribution Margin per unit = (2/3 x $8) + (1/3 x $12) = $8.67

Next, we can use the following formula to calculate the break-even quantity:

Break-even quantity = Fixed Costs / Contribution Margin per unit

Plugging in the numbers:

Break-even quantity = $117,600 / $8.67 = 13,560 units

Since the sales mix is 2 to 1, we can calculate the number of snips sold at break-even as follows:

Snips sold at break-even = (2/3 x 13,560) = 8,400

Therefore, the answer is B) 8,400 snips.

Briggs Tools Makes 2 Products, Snips and Cutters