Exercise 19-6 Yard Tools manufactures lawnmowers, weed-trimmers, and chainsaws.

Question

Exercise 19-6 Yard Tools manufactures lawnmowers, weed-trimmers, and chainsaws. Its sales mix and unit contribution margin are as follows. Unit Contribution Margin Lawnmowers Weed-trimmers Chainsaws Sales Mix 20 % 50% 30 % $31 $20 $36 Yard Tools has fixed costs of $3,915,000. Compute the number of units of each product that Yard Tools must sell in order to break even under this product mix. (Use the Weighted-Average Unit Contribution Margin Ratio rounded to 2 decimal places e.g. 0.25 and round final answers to 0 decimal places, e.g. 2,510.) Lawnmowers Weed-trimmers Chainsaws units units units Click if you would like to Show Work for this question:

Explanation / Answer

Weighted contribution margin=Respective contribution margin*Respective sales mix

=(0.2*31)+(0.5*20)+(0.3*36)=$27

Hence overall breakeven=Fixed cost/contribution margin

=(3915000/27)=145000 units

Lawnmowers(145000*0.2) 29000 units Weed-trimmers(145000*0.5) 72500 units Chainsaws(145000*0.3) 43500 units.

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