Taylor Company produces two products, X and Y, which account for 70% and 30%, respectively, of total sales dollars.Contribution margin ratios are 60% for X and 30% for Y.Total fixed costs are $140,000.What is Taylor's break-even point in sales dollars? (Note: Round answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

Average contribution margin ratio = (Sales percentage of product X of total sales dollars × Contribution margin ratio for product X) + (Sales percentage of product Y of total sales dollars × Contribution margin ratio for product Y) = (0.70 × 0.60) + (0.30 × 0.30) = 0.42 + .09 = 0.51
Break-Even Sales Dollars = Total Fixed Cost / Contribution Margin Ratio
Break-even sales dollars = $140,000 / 0.51 = $274,510

Taylor Company Produces Two Products, X and Y, Which Account