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Megan Company has fixed costs of $180,000. The unit selling price, variable cost per unit, and...

Question:

Megan Company has fixed costs of $180,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are as follows:

Product Selling Price Variable Cost per Unit Contribution Margin per Unit
Q $160 $100 $60
Z $100 $80 $20

The sales mix for products Q and Z is 75% and 25%, respectively. Determine the break-even point in units of Q and Z.

Break Even Point:

Break Even Point (BEP) is the point at which a company fully covers its fixed costs with its income. The formula to calculate break even point in units is as follows:

  • Break Even Point in Units = Fixed Costs / Contribution Margin per Unit

Answer and Explanation:

The formula to calculate break even point for a single product is as follows:

  • Break Even Point in Units = Fixed Costs / Contribution Margin per Unit

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How to Calculate the Break-Even Point - Definition & Formula

from Financial Accounting: Help and Review

Chapter 5 / Lesson 28
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