Print Item Sales Mix and Break-Even Sales Data related to the expected sales of

Question

Print Item Sales Mix and Break-Even Sales Data related to the expected sales of laptops and tablets for Tech Products Inc. for the current year, which is typical of recent years, are as follc Products Unit Selling Price Unit Variable Cost Sales Mix Laptops Tablets The estimated fixed costs for the current year are $2,498,600. $1,600 $800 40% 850 350 60% 1. Determine the estimated units of sales of the overall (total) product, E, necessary to reach the break-even point for the current year units 2. Based on the break-even sales (units) in part (1), determine the unit sales of both laptops and tablets for the current year units Tablets 3. Assume that the sales mix was 50% laptops and 50% tablets. Compute the break-even point of the overall (total) product E. Why is it so different? The break-even point is higher product. in this scenario than in part (1) because the sales mix is weighdreheavily toward the product wi 5 more Check My Work uses remaning

Explanation / Answer

(1). Break-even point = 4030 units

Explanation;

Formula of break-even point is as follow;

Break-even point = Fixed costs / Contribution margin

So let’s calculate contribution margin;

Contribution margin for Laptops;

(Sale – Variable costs) * Percentage in sales mix

($1600 – $800) * 0.40 = $320

Contribution margin for Tablets;

(Sale – Variable costs) * Percentage in sales mix

($850 – $350) * 0.60 = $300

So combined contribution margin ($320 + $300) = $620

Now let’s calculate break-even point;

Break-even point ($2498600 / $620) = 4030 units

(2).

Laptops

1612 units

Tablets

2418 units

Explanation;

Sale of Laptops (4030 * 0.40) = 1612 units

Sale of Tablets (4030 * 0.60) = 2418 units

(3). Break-even point = 3844 units

Explanation;

Formula of break-even point is as follow;

Break-even point = Fixed costs / Contribution margin

So let’s calculate contribution margin;

Contribution margin for Laptops;

(Sale – Variable costs) * Percentage in sales mix

($1600 – $800) * 0.50 = $400

Contribution margin for Tablets;

(Sale – Variable costs) * Percentage in sales mix

($850 – $350) * 0.50 = $250

So combined contribution margin ($400 + $250) = $650

Now let’s calculate break-even point;

Break-even point ($2498600 / $650) = 3844 units

Break-even point is lower in this scenario than in part (1) because the sales mix is weighted more heavily towards product Laptops. And we know that Laptops have higher contribution margin per unit.

Laptops

1612 units

Tablets

2418 units

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