Question 10 A firm sells two products Product R sells for 20

Question 10

A firm sells two products. Product R sells for $20; its variable cost is $6. Product S sells for $50; its variable cost is $30. Product R accounts for 60 percent of the firm\'s sales, while S accounts for 40 percent. The firm\'s fixed costs are $4 million annually. Calculate the firm\'s break-even point in dollars

Remember: input the answer with no commas for thousands or no dollar sign. You need to input only number with decimal point (if any),

Solution

Ans:- The contribution for product R is 70 percent of selling price, or 0.70; the contribution for for product S is 0.40

The weighted contribution for R is .70*.60=.42; the weighted contribution for S is.40*.40=.16

The sum of the weighted contribution is 0.58

The break-even point is 4000000/0.58= 6896552