Sales Mix and Break-Even Sales Northwest Technology Inc. manufactures and sells

Question

Sales Mix and Break-Even Sales Northwest Technology Inc. manufactures and sells two products, digital game players and computer tablets. The fixed costs are $213,400, and the sales mix is 70% game players and 30% computer tablets. The unit selling price and the unit variable cost for each product are as follows: Products Unit Selling Price Unit Variable Cost Game players Tablets a. Compute the break-even sales (units) for the overall product, E $50 $40 130 80 units b. How many units of each product, game players and tablets, would be sold at the break-even point? Digital game players Computer tablets units units

Explanation / Answer

Contribution margin=Sales-Variable expenses

Contribution margin for Game players=(50-40)=$10/unit

Contribution margin for Tablets=(130-80)=$50/unit

Hence overall weighted Contribution margin=(10*0.7)+(50*0.3)

=$22

1.Overall breakeven=Fixed cost/Contribution margin

=(213400/22)

=9700 units.

2.

Digital game players(9700*0.7) 6790 units. Computer tablers(9700*0.3) 2910 units.

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