Gabe Industries sells two products,Basic models and Deluxe models.Basic models sell for $42 per unit with variable costs of $30 per unit.Deluxe models sell for $50 per unit with variable costs of $40 per unit.Total fixed costs for the company are $75,400.Gabe Industries typically sells four Basic models for every Deluxe model.What is the breakeven point in total units?

Question

Quizplus · Accepted Answer

A)
Basic Deluxe Total
Sales $42 $50
Variable Costs 30 40
Contribution Margin 12 10
× Sales Mix 4 1 5
Contribution margin $48 $10 $58
Contribution Margin $58 / 5 Sales Mix = $11.60 Weighted CM
Fixed costs $75,400 / 11.60 = 6,500 BE units

Gabe Industries Sells Two Products,Basic Models and Deluxe Models