The following data pertain to the three products produced by Rona Corporation: Fixed costs are $90,000 per month.
Of all units sold,60% are Product A,30% are Product B,and 10% are Product C.
What is the monthly break-even point for total units?
$\begin{array}{lrrr}
& \mathrm{A} & \mathrm{B} & \mathrm{C} \
\text { Selling price per unit } & \$ 5.00 & \$ 7.00 & \$ 6.00 \
\text { Variable costs per unit } & 4.00 & 5.00 & 3.00 \
\text { Contribution margin per unit } & \$ 1.00 & \$ 2.00 & \$ 3.00
\end{array}$
A)36,000 units
B)45,000 units
C)60,000 units
D)180,000 units

Question

The following data pertain to the three products produced by Rona Corporation: Fixed costs are $90,000 per month.
Of all units sold,60% are Product A,30% are Product B,and 10% are Product C.
What is the monthly break-even point for total units?
$\begin{array}{lrrr} 
& \mathrm{A} & \mathrm{B} & \mathrm{C} \
\text { Selling price per unit } & \$ 5.00 & \$ 7.00 & \$ 6.00 \
\text { Variable costs per unit } & 4.00 & 5.00 & 3.00 \
\text { Contribution margin per unit } & \$ 1.00 & \$ 2.00 & \$ 3.00
\end{array}$
A)36,000 units
B)45,000 units
C)60,000 units
D)180,000 units

Quizplus · Accepted Answer

To find the break-even point in units, we first calculate the weighted average contribution margin per unit, considering the sales mix. The weighted average contribution margin is calculated as follows: $(0.60 \times \$1) + (0.30 \times \$2) + (0.10 \times \$3) = \$0.60 + \$0.60 + \$0.30 = \$1.50$. Then, we divide the total fixed costs by the weighted average contribution margin to find the break-even point in units: $\$90,000 / \$1.50 = 60,000$ units.

The Following Data Pertain to the Three Products Produced by Rona