Question

Rusty Co. sells two products, X and Y. Last year, Rusty sold 5,000 units of X and 35,000 units of Y. Related data are as follows: Unit Selling Unit Variable Unit Contribution Product Price Cost Margin X $110 $70 $40 Y 70 50 20 Assuming that last year's fixed costs totaled $675,000, what was Rusty Co.'s break-even point in units

Answer 1

Answer:

Break-even point (units)= 30,000

Explanation:

Giving the following information:

Contribution Product:

Product X= $40

Product Y= $20

First, we need to calculate the sales proportion:

Product X= 5,000/40,000= 0.125

Product Y= 35,000/40,000= 0.875

To calculate the break-even point in units, we need to use the following formula:

Break-even point (units)= Total fixed costs / Weighted average contribution margin

Break-even point (units)= 675,000 / (0.125*40 + 0.875*20)

Break-even point (units)= 30,000