Brevard Company sells two products-A and B.Product A is sold for $26 per unit and has a variable cost per unit of $16.Product B is sold for $34 per unit and has a unit variable cost of $21.Total fixed costs for the company are $50,000.Brevard Company typically sells three units of Product A for every unit of Product B.What is the breakeven point in total units?
A) 4,651 units
B) 3,489 units
C) 2,326 units
D) 1,163 units

Question

Quizplus · Accepted Answer

To find the breakeven point, calculate the weighted average contribution margin per unit. Product A's contribution margin is $10, and Product B's is $13. The sales mix is 3:1, so the weighted average contribution margin is (3*$10 + 1*$13)/4 = $10.75. The breakeven point in units is total fixed costs divided by the weighted average contribution margin: $50,000 / $10.75 = 4,651 units.

Brevard Company Sells Two Products-A and B