Water Rockets Company has provided the following information regarding the two products that it sells:

Annual fixed costs are $290,000.
How many units must be sold in order for Water Rockets to breakeven,assuming the company sells five jet boats for every two ski boats sold? (Round intermediary dollar amounts to the nearest dollar and round unit amounts up to the next whole unit. )

Question

Water Rockets Company has provided the following information regarding the two products that it sells:

Annual fixed costs are $290,000.
How many units must be sold in order for Water Rockets to breakeven,assuming the company sells five jet boats for every two ski boats sold? (Round intermediary dollar amounts to the nearest dollar and round unit amounts up to the next whole unit. )

Quizplus · Accepted Answer

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Weighted contribution = ($3,000 × 5 jet boats)+ ($5,000 × 2 ski boats)= $15,000 + $10,000 = $25,000
Weights = 5 jet boats + 2 ski boats = 7 boats
Weighted-average contribution margin per unit = $25,000 / 7 boats = $3,571 per boat
Required sales in units = (Fixed costs + Target profit)/ Contribution margin per unit
Required sales in units = ($290,000 + 0)/ $3,571 per boat = 82 boats
82 boats in the ratio of 5:2 are 59 jet boats and 24 ski boats.

Water Rockets Company Has Provided the Following Information Regarding the Two