Camden Corporation sells three products (M, N, and O)in the following mix: 3:1:2.Unit price and cost data are: $\begin{array}{lccc}
& \underline{\text { M }} & \underline{\text {N }} & \underline{\text { O }} \
\text { Unit sales price } &\$ 7 & \$ 4 & \$ 6\
\text { Unit variable costs } &3&2&3\
\end{array}$ Total fixed costs are $340,000.The break-even point in sales dollars for the current sales mix is:
A)$20,000
B)$289,000
C)$400,000
D)$629,000
E)$740,000

Question

Camden Corporation sells three products (M, N, and O)in the following mix: 3:1:2.Unit price and cost data are: $\begin{array}{lccc}
&  \underline{\text { M }} &  \underline{\text {N  }} &  \underline{\text { O }} \
\text {  Unit sales price } &\$ 7 & \$ 4 & \$ 6\
\text { Unit variable costs  } &3&2&3\
\end{array}$ Total fixed costs are $340,000.The break-even point in sales dollars for the current sales mix is:
A)$20,000
B)$289,000
C)$400,000
D)$629,000
E)$740,000

Quizplus · Accepted Answer

To find the break-even point in sales dollars, first calculate the contribution margin per unit for each product: M = $4, N = $2, O = $3. Then, calculate the weighted average contribution margin: (3/6)*$4 + (1/6)*$2 + (2/6)*$3 = $3.33. Finally, divide the total fixed costs by the weighted average contribution margin ratio ($3.33/$6 = 0.555) to get the break-even point in sales dollars: $340,000 / 0.555 = $629,000.

Camden Corporation Sells Three Products (M, N, and O)in the Following