Dane Co. sells three products and incurs $18,000 per period in fixed costs. The three products have the following characteristics: Product Price Variable Cost Sales Mix
P $40 $20 3 units
Q 20 10 9 units
R 49 24 12 units
How many units of Product P will be sold at the breakeven point?

Question

Quizplus · Accepted Answer

To calculate the breakeven point, we need to find the total contribution margin that would cover the fixed costs. 
Total sales mix = 3+9+12 = 24 units 
Total contribution margin = (40-20)*3 + (20-10)*9 + (49-24)*12 = $498 
Breakeven point = Fixed costs / Total contribution margin = $18,000 / $498 = 36.14 units. 
Since we cannot sell a fraction of a unit, we round up to 37 units. 
Therefore, the number of units of Product P sold at the breakeven point is 3/24 * 37 = 4.88 units. 
Since we cannot sell a fraction of a unit, we round up to 5 units. 
Hence, the answer is C.

Dane Co Sells Three Products and Incurs $18,000 Per Period in in Fixed