The following data pertain to the three products produced by Alberts Corporation: $\begin{array}{lccc}
& \underline{\text { A }}& \underline{\text {B}}& \underline{\text {C}}\
\text { Seling price per unit } & \$ 5.00 & \$ 7.00&\$6.00 \
\text { Variable costs per unit } & \underline{4.00 }& \underline{ 5.00}& \underline{3.00} \
\text { Contribution margin per unit } & \underline{ \$ 1.00} & \underline{ \$ 2.00}& \underline{\$3.00} \
\end{array}$ Fixed costs are $90,000 per month.
Sixty percent of all units sold are Product A,30 percent are Product B,and 10 percent are Product C.
What is the monthly break-even point for total units?

Question

The following data pertain to the three products produced by Alberts Corporation: $\begin{array}{lccc}
& \underline{\text { A }}& \underline{\text {B}}& \underline{\text {C}}\
 \text { Seling price per unit } & \$ 5.00 & \$ 7.00&\$6.00 \
 \text { Variable costs per unit } & \underline{4.00 }& \underline{ 5.00}& \underline{3.00} \
\text { Contribution margin per unit } & \underline{ \$ 1.00} & \underline{ \$ 2.00}& \underline{\$3.00} \
\end{array}$ Fixed costs are $90,000 per month.
Sixty percent of all units sold are Product A,30 percent are Product B,and 10 percent are Product C.
What is the monthly break-even point for total units?

Quizplus · Accepted Answer

To find the break-even point in units, calculate the weighted average contribution margin per unit:  Weighted average contribution margin = (0.6 * $1) + (0.3 * $2) + (0.1 * $3) = $1.50.  Break-even point in units = Total fixed costs / Weighted average contribution margin = $90,000 / $1.50 = 60,000 units.

The Following Data Pertain to the Three Products Produced by Alberts