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 letters in a formula please! I appreciate it

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 letters in a formula please! I appreciate it

Explanation / Answer

Break even point is the point when the total contribution margin = fixed costs.

total contribution margin = sales - variable costs

Let the number of chairs sold be "x" and number of stools sold be "4x" (1:4)

sales for chair = x*$60 = $60x. variable costs = $30 x. contribution margin = 60x - 30x = $30x.

sales for stools = 4x*$60 = $240x. variable costs = 4x*25 = 100x. contribution margin = 240x - 100x = 140x.

Total contribution margin from chairs and stools = 30x+140x = 170x.

Now, at breakeven, 170x = 21,000 or x = 21,000/170

sales at break even = 60x for chairs and 240x for stools. Total = 300x

Thus sales = 300*(21,000/170) = $37,059

chairs sold = 21,000/170 = 124

stools sold = 124*4 = 496

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