Birch Manufacturers has provided the following information regarding the two products that it sells:

Annual fixed costs are $300,000.
How many units must be sold in order for Birch to break even,assuming that Birch sells five jet boats for every two ski boats sold? (Round any intermediate calculations to two decimal places,and your final answer to the nearest unit. )

Question

Birch Manufacturers has provided the following information regarding the two products that it sells:

Annual fixed costs are $300,000.
How many units must be sold in order for Birch to break even,assuming that Birch sells five jet boats for every two ski boats sold? (Round any intermediate calculations to two decimal places,and your final answer to the nearest unit. )

Quizplus · Accepted Answer

B)
 11ea86ed_2bae_d36d_8b27_d70cda91706c_TB3056_00 Weighted contribution = ($5200 × 5 jet boats)+ ($6000 × 2 ski boats)= $26,000 + $12,000 = $38,000
Weights = 5 jet boats + 2 ski boats = 7 boats
Weighted-average contribution margin per unit = $38,000 / 7 boats = $5428.57 per boat
Required sales in units = (Fixed costs + Target profit)/ Contribution margin per unit
Required sales in units = ($300,000 + 0)/ $5428.57 per boat = 55 boats
55 boats in the ratio of 5:2 are 39 jet boats and 16 ski boats.

Birch Manufacturers Has Provided the Following Information Regarding the Two