Following is information about the Eclypso Company's two products
What is the total monthly sales volume in units required to break-even when the sales mix in units is 80% Product X and 20% Product Y?
A) 8,333 units
B) 50,000 units
C) 16,667 units
D) 56,667 units

Question

Following is information about the Eclypso Company's two products  
 What is the total monthly sales volume in units required to break-even when the sales mix in units is 80% Product X and 20% Product Y?
A) 8,333 units 
B) 50,000 units 
C) 16,667 units 
D) 56,667 units

Quizplus · Accepted Answer

SUPPORTING CALCULATIONS:
Average contribution margin per unit = [Proportion of Product X in sales mix × (Price - Variable cost per unit)] + [Proportion of Product Y in sales mix × (Price - Variable cost per unit)]
Average contribution margin per unit = [0.80 × ($10.00- $7.00)] + [0.20 × ($10.00 - $8.00)]
Average contribution margin per unit = $2.40 + $0.40 = $2.80
Monthly sales volume in units required to break even = Total fixed costs / Average contribution margin per unit
Monthly sales volume in units required to break even = $140,000 / $2.80 = 50,000 units

Following Is Information About the Eclypso Company's Two Products