Nyota Corp sells two products. Product A sells for $100 per unit, and has unit v
ID: 2428167 • Letter: N
Question
Nyota Corp sells two products. Product A sells for $100 per unit, and has unit variable costs of $60. Product B sells for $70 per unit, and has unit variable costs of $50. Currently, Nyota sells three units of product B for every one unit of product A sold. Nyota has fixed costs of $750,000. What is Nyota's break-even point in units?
30,000 units of A and 30,000 units of B
7,500 units of A and 22,500 units of B
22,500 units of A and 7,500 units of B
15,000 units of A and 15,000 units of B
Explanation / Answer
Product Contribution
=========== Product A Product B
Selling price $100 $70
Less : Variable costs $60 $50
Contribution Margin $40 $20
Product-Mix
==========
30,000 units of A and 30,000 units of B
(30,000 x $40 ) + (30,000 x $20) = $1,800,000
7,500 units of A and 22,500 units of B
(7,500 x $40 ) + (22,500 x $20) = $750,000
22,500 units of A and 7,500 units of B
(22,500 x $40 ) + (7,500 x $20) = $1,800,000
15,000 units of A and 15,000 units of B
(15,000 x $40 ) + (15,000 x $20) = $900,000
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