ePiano makes electronic keyboards. The practice model price is $220, and its variable expenses are $190. The deluxe model price is $340, and its variable expenses are $250. The professional model price is $1,200 and its variable expenses are $800. Total fixed expenses are $187,000. In general, ePiano sells six practice models and three deluxe models for every professional model sold.
-Refer to the Figure.How many practice models are sold at break-even?

Question

Quizplus · Accepted Answer

To find the break-even point, calculate the contribution margin for each model and use the sales mix to determine the total units needed to cover fixed expenses. The contribution margins are $30 for practice, $90 for deluxe, and $400 for professional. The sales mix is 6:3:1. Calculate the weighted average contribution margin and divide the total fixed expenses by this to find the total units needed. Then, multiply by the proportion of practice models in the sales mix to find the number of practice models sold at break-even.

EPiano Makes Electronic Keyboards