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A firm sells two products, Regular and Ultra. For every unit of Regular sold, two units of Ultra are sold. The firm's total fixed costs are $1,612,000. Selling prices and cost information for both products follow. What is the firm's break-even point in units of Regular and Ultra? Product Unit Sales Price Variable Cost Per Unit Regular $ 20 $ 8 Ultra 24 4

Respuesta :

Answer:

31,000 Regular units and 62,000 Ultra units.

Explanation:

The computation is shown below:

                                                Regular                     Ultra

Selling price per unit              $20                            $24

Variable cost per unit             $8                              $4

Contribution margin per unit  $12                            $20

Sales mix  (1 : 2)                        33%                          67%

Now Contribution margin

Sales mix                                   $4                           $13.33

Weighted contribution margin unit             $17.33

And, the fixed cost is $1,612,000

So, the total break even units is

= $1,612,000 ÷ $17.33

= 93,000 units

So, the Regular unit sales is

= 93,000 units × 1 ÷ 3

= 31,000 units

And, the Ultra unit sales is

= 93,000 units × 2 ÷3

= 62,000 units

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