Brief Exercise 198 NoFly Corporation sells three different m

Brief Exercise 19-8 NoFly Corporation sells three different models of a mosquito \"zapper.\" Model A12 sells for $51 and has variable costs of $41. Model B22 sells for $109 and has variable costs of $80. Model C124 sells for $403 and has variable costs of $321. The sales mix of the three models is A12, 59%; B22, 30%; and C124, 11% If the company has fixed costs of?174,316, how many units of each model must the company sell in order to break even? (Round Per unit values to 2 decimal paces, e.g. 15.25 and final answers to O decimal places, e.g. 5,275.) Model A12 B22 C124 Total break-even units

Solution

Break even point for the whole company = Fixed costs / Weighted avg. Contribution margin

Weighted avg. Contribution margin = 59 % * ( 51 - 41 ) + 30 % * ( 109 - 80 ) + 11% * ( 403 - 321 )

5.9 + 8.7 + 9.02 = $ 23.62

Break even point for the whole company = 174316 / 23.62 = 7380 models

Model A12 = 7380 * 59 % = 4354

Model B22 = 7380 * 30 % = 2214

Model C124 = 7380 * 11% = 812

Total BEP units = 7380