Crest Computing. Inc. sells three types of computing devices. Information on these is as follows: If the fixed costs over the last three months of the year are $219,700, what is the expected break-even point for this same period?
A) 4,200 units
B) 4,882 units
C) 5,200 units
D) 5,493 units

Question

Crest Computing. Inc. sells three types of computing devices. Information on these is as follows:  If the fixed costs over the last three months of the year are $219,700, what is the expected break-even point for this same period?
A) 4,200 units 
B) 4,882 units 
C) 5,200 units 
D) 5,493 units

Quizplus · Accepted Answer

The weighted average contribution margin (WACM) is calculated as: (CM x Sales mix for laptop) + (CM x Sales mix for tablet) + (CM x Sales mix for desktop), thus ($40 x .25) + ($45 x .60) + ($35 x .15) or ($10.00 + $27.00 + $5.25) = $42.25. The fixed costs divided by the WACM will result in the break-even point for the period; $219,700 ÷ $42.25 = 5,200 units to break even for the last three months of the year.