Daybreak Corporation
Daybreak Corporation manufactures and sells two products: A and B.The operating results of the company are as follows:
$\text {\underline{ Product $ A $} }$ $\text {\underline{ Procluct B} }$
$\begin{array}{lll}
\text { Sales in units } & 3,000 & 4,000 \
\text { Sales price per unit } & \$ 12 & \$ 7 \
\text { Variable costs per unit } & 6 & 4
\end{array}$

In addition,the company incurred total fixed costs in the amount of $10,000.

Question

Daybreak Corporation
Daybreak Corporation manufactures and sells two products: A and B.The operating results of the company are as follows:
                                              $\text {\underline{ Product $ A $} }$ $\text {\underline{ Procluct B} }$
$\begin{array}{lll}
\text { Sales in units } & 3,000 & 4,000 \
\text { Sales price per unit } & \$ 12 & \$ 7 \
\text { Variable costs per unit } & 6 & 4
\end{array}$

In addition,the company incurred total fixed costs in the amount of $10,000.

Quizplus · Accepted Answer

To find the break-even point, we need to find the total contribution margin (sales price per unit - variable costs per unit) and divide it by the total fixed costs:

Total contribution margin = (3,000 x 6) + (4,000 x 3) = 18,000 + 12,000 = $30,000

Break-even point = $30,000 / $10,000 = 3

Therefore, the company must sell 3,000 units of A and 4,000 units of B or any combination that results in a total contribution margin of $30,000 to break even.

The closest answer choice is C, which is 2,333. This is because the company can sell 2,333 units of A and 3,333 units of B, resulting in a total contribution margin of (2,333 x 6) + (3,333 x 3) = $14,997, which is close to the break-even point of $30,000.

Daybreak Corporation Daybreak Corporation Manufactures and Sells Two Products: a and B.The

Daybreak Corporation
Daybreak Corporation Manufactures and Sells Two Products: a and B.The