Genesis Corporation sells three types of snowboards with the following information: What is the break-even point for Genesis Corporation if total fixed costs are $883,200?
A) 14,245 units
B) 15,771 units
C) 19,200 units
D) 21,029 units

Question

Genesis Corporation sells three types of snowboards with the following information:  What is the break-even point for Genesis Corporation if total fixed costs are $883,200?
A) 14,245 units 
B) 15,771 units 
C) 19,200 units 
D) 21,029 units

Quizplus · Accepted Answer

Before computing the weighted-average contribution margin, the unit contribution margin for each snowboard must be computed. Beginner, ($40 - $10) is $30, Novice ($50 - $15) is $35, and Expert ($$80 - $20) is $60. The weighted-average contribution margin (WACM) is then calculated as: (CM x Sales mix for Beginner) + (CM x Sales mix for Novice) + (CM x Sales mix for Expert), thus ($30 × .50) + ($35 × .20) + ($60 × .40) or ($15.00 + $7.00 + $24.00) = $46.00. The fixed costs divided by the WACM will result in the break-even point for the period; $883,200 ÷ $46.00 = 19,200 units.

Genesis Corporation Sells Three Types of Snowboards with the Following