Browning Company sells two products-X and Y. Product X is sold for $25 per unit and has a variable cost per unit of $15. Product Y is sold for $30 per unit and has a unit variable cost of $20. Total fixed costs for the company are $20,000. Browning Company typically sells three units of Product X for every unit of Product Y. What is the breakeven point in total units?

Question

Quizplus · Accepted Answer

To find the breakeven point, calculate the weighted average contribution margin per unit. Product X has a contribution margin of $10 ($25 - $15), and Product Y has a contribution margin of $10 ($30 - $20). The sales mix is 3:1, so the weighted average contribution margin is (3/4)*$10 + (1/4)*$10 = $10. The breakeven point in units is total fixed costs divided by the weighted average contribution margin, which is $20,000 / $10 = 2,000 units.

Browning Company Sells Two Products-X and Y