24 ABC Company has introduced a second product to its retail

24. ABC Company has introduced a second product to its retail kiosks at the mall during the holiday season. t now sells remote control airplanes with a contribution margin of $20 and remote control helicopters with a contribution margin of $12. Research shows that the company is likely to sell 3 airplanes for every helicopter that it sells. Fixed costs will remain control toys are sold at breakeven? the same at $8,640 for the holiday season. How many total remote A. 540 remote control toys B. 480 remote control toys C. 270 remote control toys D. 120 remote control toys

Solution

Answer is B - 480

Break even Point = fixed cost / weighted average contribution margin =8640/18 = 480 units

Fixed cost = 8640 weighted average contribution margin = ( sales ratio of airplanes*contribution margin)+(sales ratio of helicopter*contribution margin) = (.75*20)+(.25*12) = 18