If the weighted average contribution margin is $20,fixed costs are $30 000 and the sales mix is 25% product F and 75% product H,the units of each product to be produced to break even are:

Question

Quizplus · Accepted Answer

To calculate the units of each product needed to break even, we first need to determine the total contribution margin per unit:

Product F: 0.25 x $20 = $5
Product H: 0.75 x $20 = $15

Next, we can set up the equation:

($5 x F) + ($15 x H) = $30,000

Simplifying we have:

5F + 15H = 30,000

Dividing both sides by 5, we get:

F + 3H = 6,000

We know that the sales mix is 25% F and 75% H, so we can set up another equation:

F + H = Total Units

Substituting F = 0.25(Total Units) and H = 0.75(Total Units), we get:

0.25(Total Units) + 0.75(Total Units) = Total Units

Simplifying, we have:

0.25(Total Units) = Total Units x 0.75

0.25 = 0.75

Total Units = 1500

Now we can solve for F and H:

F + 3H = 6,000
0.25(Total Units) + 3(0.75(Total Units)) = 6,000
0.25(1500) + 3(0.75(1500)) = 6,000
375 + 3(1125) = 6,000
375 + 3,375 = 6,000
3,750 = 6,000

F = 375
H = 1125

Therefore, the units of product F and H needed to break even are 375 and 1125, respectively. The best choice is B.

If the Weighted Average Contribution Margin Is $20,fixed Costs Are