Question

Data related to the expected sales of laptops and tablets for Tech Products Inc. for the current year, which is typical of recent years, are as follows:

Products Unit Selling Price Unit Variable Cost Sales Mix
Laptops $1,200 $600 40%
Tablets 700 350 60%

The estimated fixed costs for the current year are $2,498,600.
Determine the estimated units of sales of the overall (total) product, E, necessary to reach the break-even point for the current year.

Answer 1

Answer:

Laptops= 2,221 units

Tablets= 3,331 units

Explanation:

Giving the following information:

Products Unit Selling Price Unit Variable Cost Sales Mix

Laptops $1,200 $600 40%

Tablets 700 350 60%

To calculate the break-even point for each product, first, we need to calculate the break-even point for the whole company.

Break-even point (units)= Total fixed costs / (weighted average selling price - weighted average variable expense)

weighted average selling price= (selling price* weighted sales participation)

weighted average selling price= (0.4*1,200) + (0.6*700)= $900

weighted average variable cost= (variable cost* weighted sales participation)

weighted average variable cost= (0.4*600) + (0.6*350)= $450

Break-even point (units)= 2,498,600/ (900 - 450)= 5,552 units

Now, based on the participation of the sales, we can calculate the break-even point for each product.

Laptops= 0.4*5,552= 2,221

Tablets= 0.6*5,552= 3,331