Crabtree Inc.produces two types of products - Gizmos and Gadgets.The following information is available related to each product:
$\begin{array}{lrrr}
& \underline{\text { Gizmos } }&\underline{ \text { Gadgets }} \
\text { Sales price per unit } & \$ 48 & \$ 60 \
\text { Variable costs per unit } & 21 & 24 \\
\text { Percentage of total sales } & 66.67 \% & 33.33 \%
\end{array}$
If total fixed costs are $36 000,how many total units need to be sold in order for the company to break even? (round computations to nearest hundredth)

Question

Crabtree Inc.produces two types of products - Gizmos and Gadgets.The following information is available related to each product:
$\begin{array}{lrrr}
& \underline{\text { Gizmos } }&\underline{ \text { Gadgets }} \
\text { Sales price per unit } & \$ 48 & \$ 60 \
\text { Variable costs per unit } & 21 & 24 \\
\text { Percentage of total sales } &  66.67 \% & 33.33 \%
\end{array}$
If total fixed costs are $36 000,how many total units need to be sold in order for the company to break even? (round computations to nearest hundredth)

Quizplus · Accepted Answer

To calculate the number of units needed to break even, we need to use the following formula:

Break-even point (in units) = Total Fixed Costs ÷ (Price per unit - Variable Cost per unit)

For Gizmos: 
Break-even point = 36,000 ÷ (20 - 7) = 2,400 units

For Gadgets: 
Break-even point = 36,000 ÷ (50 - 30) = 1,200 units

To get the total units needed to break even, we can simply add up the units for both Gizmos and Gadgets:

Total units needed to break even = 2,400 + 1,200 = 3,600

Therefore, the closest answer choice is C) 1200.

Crabtree Inc If Total Fixed Costs Are $36 000,how Many Total Units