Riku Company manufactures two products. The budgeted per-unit contribution margi

ID: 2529352 • Letter: R

Question

Riku Company manufactures two products. The budgeted per-unit contribution margin for each product follows:

Riku expects to incur annual fixed costs of $540,000. The relative sales mix of the products is 70 percent for Super and 30 percent for Supreme.

Required

Determine the total number of products (units of Super and Supreme combined) Riku must sell to break even.

How many units each of Super and Supreme must Riku sell to break even?

(For all requirements, do not round intermediate calculations.)

Super Supreme Sales price $ 68 $ 94 Variable cost per unit (38 ) (44 ) Contribution margin per unit $ 30 $ 50

The correct answer is:

units

Note :

a. Total Units to Break Even = Fixed Cost / Total Weighted Contribution Margin Per Unit

= $ 540,000 / $ 36

= 15,000 Units

b. Hence Units of Product Super = 15,000 Units *70%

= 10,500 Units

Units of Product Supreme = 15,000 Units *30%

= 4,500 Units

a. Total number of products 15,000 units b. Product Super 10,500 units Product Supreme 4,500

units

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