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Roosevelt Corporation has a weighted-average unit contribution margin of $30 for its two products, Standard and Supreme. Expected sales for Roosevelt are 40,000 Standard and 60,000 Supreme. Fixed expenses are $1,800,000.
-How many Standards would Roosevelt sell at the break-even point?
A) 24,000
B) 36,000
C) 40,000
D) 60,000

Question

Quizplus · Accepted Answer

To find the break-even point in units, we first calculate the total contribution margin needed to cover the fixed expenses. The formula for the break-even point in units is Fixed Expenses / Unit Contribution Margin. Given that the fixed expenses are $1,800,000 and the weighted-average unit contribution margin is $30, the total units needed to break even are $1,800,000 / $30 = 60,000 units. Since the question asks for the number of Standard units at the break-even point and the sales mix is not provided, we assume the mix remains constant. The ratio of Standard to total units is 40,000 Standard / (40,000 Standard + 60,000 Supreme) = 40%. Applying this ratio to the break-even total units (60,000 units), we get 60,000 units * 40% = 24,000 Standard units.

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