Product Selling Price Variable Cost per Unit Contribution Margin per Unit
AA $150 $100 $30
BB 100 75 25
The sales mix for products AA and BB is 70% and 30%, respectively. Determine the breakeven point in units of AA and BB.
Answer:
Unit selling price of E: [($150 × 0.70) + ($100 × 0.30)] = $135.00
Unit variable cost of E: [($100 × 0.70) + ($75 × 0.30)] = 92.50
Unit contribution margin of E: $ 42.50
Break-Even Sales (units) = 12,000 units = $510,000 ÷ $42.50
Break-Even Sales (units) for AA = 12,000 units of E × 70% = 8,400 units of Product AA
Break-Even Sales (units) for BB = 12,000 units of E × 30% = 3,600 units of Product BB