Weiss Corporation produces two models of wood chairs, Colonial and Early American. The Colonial sells for $60 per chair and the Early American sells for $80 per chair. Variable expenses for each model are as follows:
Total fixed expenses are $39,600 per month. Expected monthly sales are: Colonial, 1,800 units; Early American, 600 units.
-If the sales mix and sales units are as expected,the break-even in sales dollars is closest to:

Question

Weiss Corporation produces two models of wood chairs, Colonial and Early American. The Colonial sells for $60 per chair and the Early American sells for $80 per chair. Variable expenses for each model are as follows: 
Total fixed expenses are $39,600 per month. Expected monthly sales are: Colonial, 1,800 units; Early American, 600 units.
-If the sales mix and sales units are as expected,the break-even in sales dollars is closest to:

Quizplus · Accepted Answer

We can use the formula Break-Even Point (in dollars) = Fixed Costs ÷ Contribution Margin Ratio. From the given data, we know that the fixed costs are $114,000. 
To find the contribution margin ratio, we need to calculate the weighted average contribution margin per unit:
(3 × $20) + (2 × $50) + (1 × $70) = $110
Weighted average contribution margin per unit = $110 ÷ 6 units = $18.33 per unit

To find the contribution margin ratio, we divide the weighted average contribution margin per unit by the weighted average selling price per unit:
Contribution margin ratio = ($18.33 ÷ $40) × 100% = 45.83%

Now we can calculate the break-even point in dollars:
Break-Even Point = $114,000 ÷ 0.4583 = $248,551. 
However, we are asked for the closest answer, and C is closest to $248,551. Therefore, the answer is C ($143,000).

Weiss Corporation Produces Two Models of Wood Chairs, Colonial and Early