Baines Brothers manufactures and sells two products, A and Z in the ratio of 4:2. Product A sells for $75; Z sells for $95. Variable costs for product A are $35; for Z $40. Fixed costs are $418,500. Compute the break-even point in composite units.

A) 1,748.
B) 1,468.
C) 1,550.
D) 1,395.
E) 1,270.

Question

Shawnda Thomas · Accepted Answer

Final Answer : C, Explanation :  First, we need to calculate the weighted average contribution margin per unit:[(4/6) x ($75 - $35)] + [(2/6) x ($95 - $40)] = $28.33Then, we can use the contribution margin per unit to calculate the break-even point in composite units:Break-even point = Fixed costs / Contribution margin per unitBreak-even point = $418,500 / $28.33Break-even point ≈ 1,550 unitsTherefore, the best choice is C.

Baines Brothers manufactures and sells two products, A and Z in the ratio of 4:2. Product A sells for $75; Z sells for $95. Variable costs for product A are $35; for Z $40. Fixed costs are $418,500. Compute the break-even point in composite units.

A) 1,748.
B) 1,468.
C) 1,550.
D) 1,395.
E) 1,270.

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Baines Brothers manufactures and sells two products, A and Z in the ratio of 4:2. Product A sells for $75; Z sells for $95. Variable costs for product A are $35; for Z $40. Fixed costs are $418,500. Compute the break-even point in composite units.A) 1,748.B) 1,468.C) 1,550.D) 1,395.E) 1,270.

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Learning Objectives

Learning Objectives

Related questions

Baines Brothers manufactures and sells two products, A and Z in the ratio of 4:2. Product A sells for $75; Z sells for $95. Variable costs for product A are $35; for Z $40. Fixed costs are $418,500. Compute the break-even point in composite units.

A) 1,748.
B) 1,468.
C) 1,550.
D) 1,395.
E) 1,270.