Sales Mix and Break-Even Analysis Michael Company has fixed costs of $1,140,140.

Question

Sales Mix and Break-Even Analysis Michael Company has fixed costs of $1,140,140. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products follow: Product Selling Price Variable Cost per Unit Contribution Margin per Unit $430 $200 $230 310 200 110 The sales mix for Products QQ and ZZ is 90% and 10%, respectively. Determine the break-even point in units of QQ and ZZ. If required, round your answers to the nearest whole number. a. Product QQ 5,508 X units b. Product ZZ 103,649 X units

Explanation / Answer

Weighted Contribution margin=Respective Contribution margin*Respective sales mix

=($230*0.9)+($110*0.1)=$218

Hence overall breakeven=Fixedcosts/Weighted Contribution margin

=(1140140/218)=5230 units

OO(5230*0.9) 4707 units ZZ(5230*0.1) 523 units.

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