Question 31 10 points (Extra Credi EXTRA CREDIT PROBLEM dard and Luxury. For eve

Question

Question 31 10 points (Extra Credi EXTRA CREDIT PROBLEM dard and Luxury. For every unit of Luxury the firm sells, three units of Standard are sold. The firm's total fixed costs are $1,810,000. Selling prices and cost information for both products follow. Unit Sales Price Variable Cost Per Unit Product Standard 15 S 8 34 12 Luxury a. What is the Contribution Margin per composite unit?s b What is the firm's break-even point in composite units? c. What is the firm's break-even point in units of Standard and Luxury? Standard Luxury units units units

Explanation / Answer

SOLUTION:

PART-A) 1 unit of A at [$15 - $8] contribution margin per unit 7 2 units of B at [$34 - $12] contribution margin per unit 19 Contribution margin per composite unit 26 PART-B) Break-even point in composite units = $1,810,000/$26 69615 PART-C) Units of Standard 69,615 Units of Luxury (69,615*3) 208,845

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