Sales Mix and Break-Even Analysis Michael Company has fixed costs of $1,980,720.

Question

Sales Mix and Break-Even Analysis

Michael Company has fixed costs of $1,980,720. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below.

The sales mix for products Q and Z is 55% and 45%, respectively. Determine the break-even point in units of Q and Z. If required, round your answers to the nearest whole number.

a. Product Q  units

b. Product Z  units

Operating Leverage

Cartersville Company reports the following data:

Sales $592,700
Variable costs 385,300
Fixed costs 156,800

Determine Cartersville Company's operating leverage. Round your answer to one decimal place.

Margin of Safety

The Ira Company has sales of $800,000, and the break-even point in sales dollars is $568,000.

Determine the company's margin of safety as a percent of current sales. Enter your answer rounded to one decimal place.
%

Explanation / Answer

Answer: Unit Selling price=($480*55%+680*45%)=264+306=570

Unit variable cost=(200*55%+440*45%)=110+198=308

Unit contribution margin=(570-308)=$262

BEP (units)=1980720/262=7560 units

a. Product Q  units =7560*55%=4158

b. Product Z  units=7560*45%=3402

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