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PART B: (15 POINTS) Please solve the following: 1. The sales mix of a company's two products, X and Y, is 2:1. Unit variable costs
PART B: (15 POINTS) Please solve the following: 1. The sales mix of a company's two products, X and Y, is 2:1. Unit variable costs for both products are $2, and unit selling prices are $5 for X and $4 for Y. The company has $640,000 of fixed costs. a. What is the contribution margin per composite unit? b. What is the break-even point in composite units? C. How many units of X and how many units of Y will be sold at the break-even point? Answers: 1. a. Selling price of a composite unit 2 units of X @ $5 per unit. S10 1 unit of Y @ $4 per unit 4 Selling price of a composite unit, . $14 Variable costs of a composite unit 2 units of X @ $2 per unit. $4 1 unit of Y @ $2 per unit. ...2 Variable costs of a composite unit.. S6 Therefore, the contribution margin per composite unit is $8. b. The break-even point in composite units = $640,000/88 = 80,000 units. c. At break-even, the company will sell 160,000 units (80,000 x 2) of X and 80,000 units of Y (80,000 x 1)
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