Hitchens Inc.produces and sells two products.Data concerning those products for the most recent month appear below: The fixed expenses of the entire company were $24,010.The break-even point for the entire company is closest to:

Question

Hitchens Inc.produces and sells two products.Data concerning those products for the most recent month appear below:  The fixed expenses of the entire company were $24,010.The break-even point for the entire company is closest to:

Quizplus · Accepted Answer

To calculate the break-even point for the entire company, we need to first calculate the contribution margin per unit for each product.

Contribution margin per unit = Selling price per unit - Variable expenses per unit

For product A:
Contribution margin per unit = $710 - $530 = $180

For product B:
Contribution margin per unit = $550 - $360 = $190

Next, we can calculate the weighted average contribution margin for the two products using the sales mix.

Weighted average contribution margin = (Contribution margin per unit of A x Sales mix of A) + (Contribution margin per unit of B x Sales mix of B)

Sales mix of A = 60% and sales mix of B = 40%

Weighted average contribution margin = ($180 x 0.6) + ($190 x 0.4) = $186

Now we can use the formula to calculate the break-even point for the entire company:

Break-even point (in units) = Fixed expenses / Weighted average contribution margin per unit
Break-even point (in units) = $24,010 / $186 = 129

Therefore, the closest answer choice is A) $33,817.