Sales Mix and Break-Even Analysis Jordan Company has fixed costs of $1,281,000.

Question

Sales Mix and Break-Even Analysis Jordan Company has fixed costs of $1,281,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below. Product Selling Price Variable Cost per Unit Contribution Margin per Unit Q $320 $140 $180 Z 420 340 80 The sales mix for products Q and Z is 60% and 40%, 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

Explanation / Answer

Product Q

Fixed cost allocated to product Q = 1,281,000 x 60%

                                                                   =768,600

Breakeven point = total fixed cost /contribution margin per unit

                                = 768,600/180

                                = 4270 units

Product Z

Fixed cost allocated to product Z = 1,281,000 x 40%

                                                                   =512,400

Breakeven point = total fixed cost /contribution margin per unit

                                = 512,400/80

                                = 6405 units

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