5. Gatewood Hills Corporation has three products X, Y, and Z. The company\'s fix

Question

5. Gatewood Hills Corporation has three products X, Y, and Z. The company's fixed costs are $69,000. The sales mix for its products are 3 units of X, 4 units of Y, and 1 unit of Z. Information about the three products follows: sales in dollars |S192.000 S192,000 S64 S40 309 ontribution Calculate the company's break-even point in composite units and sales dollars. (Hint: You will need to calculate the selling price of a composite unit and CM of a composite unit to calculate the break-even point in composite units. (2 points) (b) Calculate the number of units of each individual product to be sold at the break-even point. (Check: At break-even point you should have 2,250 units of product X. (1 point)

Explanation / Answer

X Y Z Selling price per unit 40 30 40 Contribution margin ratio 30% 35% 35% Contribution per unit 12 10.5 14 Sales MIX 3 units 4 units 1 unit X Sales mix percentage 37.50% 50.00% 12.50% (3/8 X100) (4/8 X100) (1/8 X100) 4.5 5.25 1.75 Weighted Average CM per unit 11.50 Break-even Point in Units of Sales Mix = Total Fixed Cost ÷ Weighted Average CM per Unit = $69,000/$ 11.50 =6,000 units Number of units of Product X , Y and at break even point Product X Y Z Sales mix ratio 37.50% 50.00% 12.50% X Total Break even units            6,000             6,000           6,000 Product Units at Break even point            2,250             3,000              750 Break even point in dollars Product X Y Z Product Units at Break even point            2,250             3,000              750 X Selling Price per unit 40 30 40 Product sales in dollars          90,000          90,000        30,000 Break even point in dollars 2,10,000

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