Brief Exercise 20-8 NoFly Corporation sells three different models of a mosquito

Question

Brief Exercise 20-8

NoFly Corporation sells three different models of a mosquito “zapper.” Model A12 sells for $60 and has variable costs of $41. Model B22 sells for $101 and has variable costs of $74. Model C124 sells for $415 and has variable costs of $309. The sales mix of the three models is A12, 58%; B22, 30%; and C124, 12%.

If the company has fixed costs of $212,691, how many units of each model must the company sell in order to break even? (Round Per unit values to 2 decimal palces, e.g. 15.25 and final answers to 0 decimal places, e.g. 5,275.)

Model A12

B22

C124

Explanation / Answer

Contribution margin/unit=Sales-Variable costs

Contribution margin for :A12=(60-41)=$19

B22=(101-74)=$27

C124=(415-309)=$106

Hence weighted Contribution margin=(19*0.58)+(27*0.3)+(106*0.12)=$31.84

Hence Total breakeven sales=Fixed cost/Weighted Contribution margin

=(212691/31.84)=6680 units(Approx).

Model Units A12(6680*0.58) 3874 UNITS B22(6680*0.3) 2004 UNITS C124(6680*0.12) 802 UNITS(APPROX).

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