Find the breakeven point based on the image Product AProduct BTotalSelling price (SP)Less: Variable cost (VC)10.0018.004.0010.00Contribution margin (CM)6.008.00Multiplied by: % Sales MixWeighted Contribution Margin (WCM)2/31/34.002.676.67Fixed cost (FC)1,000,000Target profit100,0001,100,000Units to produce and sell110,00055,000165,000

The break even sales units are calculated as fixed cost divided by contribution margin per unit.

Product A Product B Total Selling price (SP) Less: Variable cost (VC) Contribution margin (CM) 10.00 18.00 4.00 10.00 6.00 8.00 Multiplied by: % Sales Mix Weighted Contribution Margin (WCM) 2/3 1/3 4.00 2.67 6.67 Fixed cost (FC) 1,000,000 Target profit 100,000 1,100,000 Units to produce and sell 110,000 55,000 165,000

Product A Product B Total Selling price (SP) Less: Variable cost (VC) Contribution margin (CM) 10.00 18.00 4.00 10.00 6.00 8.00 Multiplied by: % Sales Mix Weighted Contribution Margin (WCM) 2/3 1/3 4.00 2.67 6.67 Fixed cost (FC) 1,000,000 Target profit 100,000 1,100,000 Units to produce and sell 110,000 55,000 165,000

Financial & Managerial Accounting

14th Edition

ISBN:9781337119207

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter20: Variable Costing For Management Analysis

Section: Chapter Questions

Problem 20.10EX

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