A firm is selling two products, chairs and bar stools, each at $60 per unit. Cha

Question

A firm is selling two products, chairs and bar stools, each at $60 per unit. Chairs have a variable cost of $30, and bar stools $25. Fixed cost for the firm is $21,000. If the sales mix changes to 1:4 (one chair sold for every four bar stools sold), what is the break-even point in dollars of sales? In units of chairs and bar stools? (Round up your unit answers to the next whole number and round "Break-even point" to the nearest whole number.)

Can you dumb this down for me and show me the steps with the actual numbers and not just letters in a formula please. I appreciate it

Explanation / Answer

Break Even Point = Fixed Cost/ Contribution margin per unit

Fixed Costs = 21000$

Contribution margin per unit = 60 * 5 - (30 + 4 *25)

=> 300 - 130

=> 170

Break Even Point = 21000/170 = 123.529 = 124

Hence 124 chairs and 124 * 4 = 496 stools to be sold

Break even point sales in dollars

=> (124+496)* 60

=> 37200$

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