Mayfield Company sells two products, Blue models and Plaid models. Blue models s

Question

Mayfield Company sells two products, Blue models and Plaid models. Blue models sell for $44 per unit with variable costs of $25 per unit. Plaid models sell for $46 per unit with variable costs of $25 per unit. Total fixed costs for the company are $20,000. Mayfield Company typically sells two Blue models for every five Plaid models. What is the breakeven point in total units? (Round any intermediary calculations to the nearest whole number.) A. 2.857 units O B. 190 units O C. 1,000 units D. 140 units

Explanation / Answer

Break Even Point = Fixed Cost / Contribution Margin as Per Sales Mix

= $ 20,000 /$ 20.42857143

= $ 20,000 /$ 20

= 1,000 Units

Hence the correct answer is C. 1,000 Units

Note:

Contribution Margin as Per Sales Mix:

Blue Plaid Selling Price Per Unit 44 46 Less: Variable Cost Per Unit 25 25 Contribution Margin 19 21 Sales Mix 0.285714286 0.714285714 Contribution Margin  as Per Sales Mix ( Contribution Margin * Sales Mix) 5.428571429 15 20.42857143

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---