WileyPlus Problem 35 The Zager Company produces two types of

WileyPlus Problem 3-5 The Zager Company produces two types of food processors. Information about the two products for 2012 is as follows: Selling price per unit Variable costs per unit Contribution margin per unit Regular Deluxe $78 $110 53 $31 $57 47 The company expects fixed costs to be $158,000 in 2012, The firm expects 60% of its sales (in units) to be Regular model food processors. Determine the break-even point in units. Break-even point units

Solution

Solution:

Total fixed costs = $158,000

Breakeven point in units = Total fixed costs / Weighted average contribution margin per unit

= $158,000 / $41.40 = 3816 units

Computation of weighted average contribution margin per unit - Zager Company
Particulars	Regular	Deluxe	Total
Selling price per unit	$78.00	$110.00
Variable cost per unit	$47.00	$53.00
Contribution margin per unit	$31.00	$57.00
Sales Mix	60%	40%
Weighted average contribution per unit	$18.60	$22.80	$41.40