Assuming a constant mix of 3 units of Little for every 1 unit of Big.
$$\begin{array} { l r r r }
& \underline { \text { Little } } & \underline { \text { Big } } & \text { Total } \
\text { Sales } & \$ 20 & \$ 30 & \
\text { VC } & 14 & 18 & \
\text { Total fixed costs } & & & \$ 48000
\end{array}$$
The break-even point in units would be:

Question

Assuming a constant mix of 3 units of Little for every 1 unit of Big.
$$\begin{array} { l r r r } 
& \underline { \text { Little } } & \underline { \text { Big } } & \text { Total } \
\text { Sales } & \$ 20 & \$ 30 & \
\text { VC } & 14 & 18 & \
\text { Total fixed costs } & & & \$ 48000
\end{array}$$
The break-even point in units would be:

Quizplus · Accepted Answer

To find the break-even point, calculate the contribution margin per unit for each product: Little = $20 - $14 = $6, Big = $30 - $18 = $12. The weighted average contribution margin is (3 * $6 + 1 * $12) / 4 = $7.50. The break-even point in units is $48000 / $7.50 = 6400 units. With a mix of 3:1, this is 4800 units of Little and 1600 units of Big.

Assuming a Constant Mix of 3 Units of Little for Every