Browning Company sells two productsX and Y Product X is sold

Browning Company sells two productsX and Y. Product X is sold for $25 per unit and has a variable cost per unit of $15. Product Y is sold for $30 per unit and has a unit variable cost of $20. Total fixed costs for the company are $20,000. Browning Company typically sells three units of Product X for every unit of Product Y. What is the breakeven point in total units?

Solution

Firstly, you should simplify it.

The ratio is 3 Xs for every 1 Y,

so you can add the variable costs together (3 x 15 + 1 x 20 = 65)

and what they sell for together (3 x 25 + 1 x 30 = 105) to get it for every 4 products solved,

Now you can write it as;

For every 4 sold, the variable costs are $65 and the selling cost is $105

N = units of product Y; and 3N = units of product X;

Sove for N : ($25.00 – $15.00)3N + ($30.00 – $20.00) N – $20,000 = 0

$30N + $10N = $20,000

$40N = $20,000

N = 500 units

Product Y = 500 units; Product X = 1,500 units

So Total = 500+1500 = 2000 units