Question

The Landscape Company produces and sells large and medium landscaping tiles. The large landscaping tiles sell for $90 per unit with variable costs of $30 per unit. The medium landscaping tiles sell for $60 per unit with variable costs of $30 per unit. The total fixed costs for the company is $42,000. The Landscape Company usually sells three large tiles for every two medium tiles. What is the breakeven point in units?

Answer 1

Answer:

the breakeven point is 875 units

Explanation:

Data provided:

selling cost of large landscaping tiles = $90 per unit

Variable cost of  large landscaping tiles = $30 per unit

selling cost of medium landscaping tiles = $60 per unit

variable costs of medium landscaping tiles = $30 per unit

Total fixed costs for the company = $42,000

Landscape Company sells three large tiles for every two medium tiles

i.e large : medium tiles = 3 : 2

let the number of tiles sold be x

and, large tiles sold be = $\frac{3}{3+2}x=\frac{3}{5}x$

and medium tiles sold = thus,$\frac{2}{3+2}x=\frac{2}{5}x$

Total cost involved = total fixed cost + Total variable cost

= $42,000 + $\ 30\times\frac{3}{5}x+\ 30\times\frac{2}{5}x$

Total cost involved = $42,000 + 30x

Total sales = $\ 90\times\frac{3}{5}x+\ 60\times\frac{2}{5}x$

Total sales = ( 18 × 3x ) + ( 12 × 2x )  

=  54x + 24x

= 78x    ..........(3)

Now,

at breakeven point, the total sales is equal to the total cost

thus,

$42,000 + 30x = 78x

⇒ $42,000 = 48x

or

⇒ x = 875 units

Hence, the breakeven point is 875 units