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Social ScienceEdgewater Enterprises manufactures two products. Information follows:Product B$16.90$ 7.3020%Product ASales priceVariable cost per unitProduct mix$13.60$ 6.9080%Calculate the break-even point if Edgewater's total fixed costs are $242,000. (Round your intermediate calculations to 2 decimal places and final answer to the nearest wholenumber.)Units of Product AUnits of Product B
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Edgewater Enterprises manufactures two products. Information follows: Product B $16.90 $ 7.30 20% Product A Sales price Variable cost per unit Product mix $13.60 $ 6.90 80% Calculate the break-even point if Edgewater's total fixed costs are $242,000. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole number.) Units of Product A Units of Product B
Expert Answer
Break-even point is a no loss no profit point for the company. Break even units of sales is that total number of units of a product by selling which a company neither incurrs losses nor earns profits. The sales of this number of units covers cost of the product.
To calculate the break-even units of each product, weighted average contribution margin of both products will be calculated first as follows:
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Product A Particular Sales price Less: variable cost Contribution Product mix Product B $13.60 $16.90 ($6.90) $6.70 ($7.30) $9.60 20% 80% ($6.70x80%) S5.36 ($9.60x20%) = Contribution according to product mix $1.92 $5.36+$1.92= $7.28 Weighted average contribution margin
Fixed cost is $242,000
Break-even point of sales (units) for ...
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totalfixed cost Break even sales units = - weighted average contribution margin $242,000 $7.28 = 33,242units
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