Becker Company produces two products, X and Y. The following information is pres

Question

Becker Company produces two products, X and Y. The following information is presented for both products:

                                                                           X                              Y

                Selling price per unit                $40                         $25

                Variable cost per unit                  25                            15

Total fixed costs are $275,000.

Required:

a.     Calculate the contribution margin for each product.

b.     Calculate breakeven point in units of both X and Y if the sales mix is 3 units of X for every unit of Y.

c.   Calculate breakeven volume in total dollars if the sales mix is 2 units of X for every 3 units of Y.

Explanation / Answer

Solution-a

Contribution Margin =  Selling price per unit -  Variable cost per unit

For X:

Contribution Margin = $40 - $25

Contribution Margin = $15

For Y:

Contribution Margin = $25 - $15

Contribution Margin = $10

Solution-b

(3*$15) + (1*$10) = $55

$275,000 / $55 = 5,000 Units

X : 5,000 Units *3 = 15,000 Units

Y: 5,000 Units *1 = 5,000 Units

Solution-c

(2*$15) + (3*$10) = $60

$275,000 / $60 = 4,583.34 Units

X : 4,583.34 Units *2 = 9,166.67 Units*$40 = $366,666.67

Y: 4,583.34 Units *3 = 13,750 Units*$25 = $343,750

Total dollar sales = $366,666.67 + $343,750

Total dollar sales = $710,416.67

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.