Exercise 19-6 Yard Tools manufactures lawnmowers, weed-trimmers, and chainsaws.

Question

Exercise 19-6 Yard Tools manufactures lawnmowers, weed-trimmers, and chainsaws. Its sales mix and unit contribution margin are as follows Unit Contribution Margin Lawnmowers Weed-trimmers Chainsaws Sales Mix 20 % 50 % 30 % $29 $25 $37 Yard Tools has fixed costs of $4,321,800 Compute the number of units of each product that Yard Tools must sell in order to break even under this product mix. (Use the Weighted-Average Unit Contribution Margin Ratio rounded to 2 decimal places e.g. 0.25 and round final answers to 0 decimal places, e.g. 2,510.) Lawnmowers Weed-trimmers Chainsaws units units units Click if you would like to Show Work for this question LINK TO TEXT

Explanation / Answer

Solution : Let, total number of units be 'p'

Break-even point means profit =0

Now, Contribution - fixed cost = profit

(0.20p x $29 + 0.50p x $25 + 0.30p x $37 ) - $4,321,800 = 0

$29.40 p = $4,321,800

p = 147,000 units

Lawnmower = 0.20 x 147,000 =29,400 units

Weed trimmers = 0.50 x 147,000 = 73,500 units

Ch ainsaws = 0.30 x 147,000 = 44,100 units

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