Sales Mix and Break-Even Sales New Wave Technology Inc. manufactures and sells t

Question

Sales Mix and Break-Even Sales

New Wave Technology Inc. manufactures and sells two products, MP3 players and satellite radios. The fixed costs are $384,000, and the sales mix is 80% MP3 players and 20% satellite radios. The unit selling price and the unit variable cost for each product are as follows:

a. Compute the break-even sales (units) for both products combined.
units

b. How many units of each product, MP3 players and satellite radios, would be sold at the break-even point?

Products Unit Selling Price Unit Variable Cost MP3 players $70 $50 Satellite radios 180 110

Explanation / Answer

a. The break-even sales (units)   = Fixed Cost / Weighted Contribution Margin

= $ 384,000 / $ 30

= 12,800 Units

Hence the correct answer is 12,800 Units

b. Break Even Sales = 12,800 Units

MP3 Playes = 12,800* 80%

= 10,240 Units

Satellite radios = 12,800* 20%

= 2,560 Units

Hence the correct answer is :

MP3 players 10,240 units Satellite radios 2,560 units

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