Using the following unit data for a company that produces Product A and B, what is the breakeven point (round properly) when fixed costs total $175,000?

Question

Quizplus · Accepted Answer

To find the breakeven point, we need to calculate the total contribution margin per unit, which is the difference between the selling price and variable cost per unit.

Product A:
Contribution margin per unit = $11.50 - $6.70 = $4.80
Breakeven units = Total fixed costs / Contribution margin per unit
Breakeven units for Product A = $175,000 / $4.80 = 36,458.33 units

Product B:
Contribution margin per unit = $14.50 - $9.40 = $5.10
Breakeven units = Total fixed costs / Contribution margin per unit
Breakeven units for Product B = $175,000 / $5.10 = 34,313.73 units

Rounding properly, we get:
Breakeven units for Product A = 36,458 units 
Breakeven units for Product B = 34,314 units

Therefore, the best choice is D, which shows the breakeven point as 2,574 units of Product A and 1,144 units of Product B to cover the fixed costs of $175,000.

Using the Following Unit Data for a Company That Produces