Wellcom Corporation has the following sales mix for its three products: A, 20%; B, 35%; and C, 45%. Fixed costs total $400,000 and the weighted-average contribution margin is $100. How many units of product A must be sold to break-even?

Question

Quizplus · Accepted Answer

The weighted-average contribution margin is $100, so the contribution margin ratio is $100/$140 = 71.43%. The break-even point in units is $400,000/($100/$140) = 20,000 units. Since product A represents 20% of the sales mix, 20% of 20,000 units, or 4,000 units, must be sold to break-even.

Wellcom Corporation Has the Following Sales Mix for Its Three