Question

elise corporation has the following sales mix for its three products: a, 20%; b, 35%; and c, 45%. fixed costs total $450,000 and the weighted-average contribution margin is $100. how many units of product a must be sold to break-even?

Answer 1

The numbers of units of product A that must be sold to break-even is equal to 800 units

The Break-even point may be defined as the point at which both the total cost and total revenue of a particular firm on a particular business becomes equal. This means that the firm is making no profit nor any loss in the business. This means that the production costs and the product selling costs are same. The break-even point is calculated by using following formula:

Break-even point in units = Fixed expense/(Selling price per unit-Variable expense per unit)

According to question, Fixed expense = $400,000 and Selling price per unit-Variable expense per unit = $100

Break-even point in units = $400,000/$100 = $4,000 units

Now, Elise Corporation has the following sales mix for its three products: A, 20%; B, 35%; and C, 45%.

So, the numbers of product A must be sold to break-even is

20% of $4000 units

(20/100)×$4000 = 800 units

Learn more about Break-even point at:

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