Sales Mix and Break-Even Analysis Michael Company has fixed costs of $1,246,000.

Question

Sales Mix and Break-Even Analysis Michael Company has fixed costs of $1,246,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below. Product Selling Price Variable Cost per Unit Contribution Margin per Unit $520 $220 $300 300 200 100 The sales mix for products Q and Z is 90% and 10%, 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

Explanation / Answer

Total Contribution margin=(300*0.9)+(100*0.1)=$280

Hence total breakeven=Fixed costs/Contribution margin

=(1246000/280)=4450 units

Q(4450*0.9) 4005 units Z(4450*0.1) 445 units

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