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. Sales Mix Unit Contribution Margin Lawnmowers 20 % $32 Weed-trimmers 50 % $22 Chainsaws 30 % $40 Yard Tools has fixed costs of $4,263,000. Compute the number of units of each product that Yard Tools must sell in order to break even under this product mix. (Use Weighted-Average 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 units Weed-trimmers units Chainsaws units

Explanation / Answer

Weighted-Average Contribution Margin Ratio = (32*20%)+(22*50%)+(40*30%)= 29.40 Overall break-even point =4263000/29.4= 145000 Lawnmowers 29000 =145000*20% Weed-trimmers 72500 =145000*50% Chainsaws 43500 =145000*30%

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