Dietrick Corporation produces and sells two products. Data concerning those products for the most recent month appear below: Fixed expenses for the entire company were $42,550.The break-even point for the entire company is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $42,550
B) $71,020
C) $69,754
D) $30,450

Question

Dietrick Corporation produces and sells two products. Data concerning those products for the most recent month appear below:  Fixed expenses for the entire company were $42,550.The break-even point for the entire company is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $42,550 
B) $71,020 
C) $69,754 
D) $30,450

Quizplus · Accepted Answer

First, we need to calculate the contribution margin per unit for each product:

Product A: selling price per unit $60 - variable cost per unit $35 = $25 contribution margin per unit
Product B: selling price per unit $90 - variable cost per unit $45 = $45 contribution margin per unit

Next, we can use the contribution margin per unit to calculate the break-even point in units for each product:

Product A: ($25x + $42,550) = $60x
$42,550 = $35x
x = 1,215 units

Product B: ($45x + $42,550) = $90x
$42,550 = $45x
x = 945 units

Finally, we can add the break-even point in units for each product to get the break-even point for the entire company:

1,215 units (Product A) + 945 units (Product B) = 2,160 units

Therefore, the break-even point for the entire company is 2,160 units, which represents $69,754 in sales revenue (2,160 units x $45 contribution margin per unit). The closest answer choice to this result is C.

Dietrick Corporation Produces and Sells Two Products