Sales Mix and Break-Even Sales Technology Inc. manufactures and sells two produc

Question

Sales Mix and Break-Even Sales Technology Inc. manufactures and sells two products, MP3 players and satellite radios. The fixed costs are $312,000, and the sales mix is 80% MP3 players and 20% satellite radios. The unit selling price and the unit variable cost for each product are as follows: Unit Selling PriceUnit Variable Cost Products MP3 players Satellite radios a. Compute the break-even sales (units) for both products combined. $70 $50 180 110 units b. How many units of each product, MP3 players and satellite radios, would be sold at the break-even point? MP3 players units units ?) Satellite radios

Explanation / Answer

Unit Contribution Margin of MP3 players= $70.00 –$50.00= $20.00

Unit Contribution Margin of Satellite radios = $180.00 – $110= $70.00

a.Break-Even Sales (units)

= 312,000/(20x80% + 70 x 20%)

= 312,000/(16 +14)

= 10,400 units

b.

MP3 players = 8320 units (10,400 units × 0.80)

Satellite radios = 2080 Units (10,400 units × 0.20)

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