Sales Mix and Break-Even Analysis Jordan Company has fixed costs of $1,107,840.
ID: 2573995 • Letter: S
Question
Sales Mix and Break-Even Analysis
Jordan Company has fixed costs of $1,107,840. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below.
The sales mix for products Q and Z is 40% and 60%, respectively. Determine the break-even point in units of Q and Z. If required, round your answers to the nearest whole number.
a. Product Q ______ units
b. Product Z ______ units
I need help. I can't figure out how to do this and all the answers I've put in are incorrect.
Product Selling Price Variable Cost per Unit Contribution Margin per Unit Q $460 $310 $150 Z 680 460 220Explanation / Answer
multi-product Break Even = FIXED COST ÷ WACM
WACM = .4×150+.6×220
= 60 + 132 = 192
BREAK EVEN POINT (company as a whole) = 1107840÷192 = 5770
a) Q needs BREAK EVEN = 5770 × .4 = 2308
b) Z needs BREAK EVEN =5770 × .6 = 3462
*)Note
WACM = Weighted average conribution margin
= Q's contribution margin × sales mix of Q+ Z 's contribution margin + sales mix of Z
=192
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