NoFly Corporation sells three different models of a mosquito \"zapper.\" Model A

Question

NoFly Corporation sells three different models of a mosquito "zapper." Model A12 sells for $60 and has variable costs of $41. Model B22 sells for $101 and has variable costs of $74. Model C124 sells for $415 and has variable costs of $309. The sales mix of the three models is A12, 58%; B22, 30%; and C124, 12%. If the company has fixed costs of $212,691, how many units of each model must the company sell in order to break even? (Round Per unit values to 2 decimal palces, e.g. 15.25 and final answers to 0 decimal places, e.g. 5,275.) A12 B22 C124 Total break-even units

Explanation / Answer

Solution:

Breakeven total units = Fixed cost / Weighted average contribution margin per unit

= $212,691 / $31.84 = 6680 units

Total units of each model, company must sell to breakeven:

Model A12 = 6680*58% = 3874.40 units

Model B22 = 6680*30% = 2004 units

Model C124 = 6680*12% = 801.60 units

Computation of contribution margin per unit and contribution margin ratio Particulars Model A12 Model B 22 Model C 124 Total Selling Price per unit 60 101 415 Variable cost per unit 41 74 309 Contribution margin per unit 19 27 106 Sales Mix 58% 30% 12% Weigghted average contribution margin per unit $11.02 $8.10 $12.72 $31.84

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