Patricia Company produces two products, X and Y, which account for 60% and 40%, respectively, of total sales dollars. Contribution margin ratios are 50% for X and 25% for Y. Total fixed costs are $120,000. What is Patricia's break-even point in sales dollars?

Question

Quizplus · Accepted Answer

The break-even point in sales dollars can be calculated using the weighted average contribution margin ratio. First, find the weighted average contribution margin ratio: (60% * 50%) + (40% * 25%) = 30% + 10% = 40%. Then, divide the total fixed costs by this ratio: $120,000 / 40% = $300,000.

Patricia Company Produces Two Products, X and Y, Which Account