The Dooley Co.manufactures two products,Baubles and Trinkets.The following are projections for the coming year: How many Baubles will be sold at the break-even point,assuming that the facilities are jointly used with the sales mix remaining constant?
A)9,900.
B)8,800.
C)6,600.
D)5,000.

Question

The Dooley Co.manufactures two products,Baubles and Trinkets.The following are projections for the coming year:  How many Baubles will be sold at the break-even point,assuming that the facilities are jointly used with the sales mix remaining constant?
A)9,900. 
B)8,800. 
C)6,600. 
D)5,000.

Quizplus · Accepted Answer

To find the break-even point, we need to calculate the total contribution margin and set it equal to the total fixed costs.

Total contribution margin = (Contribution margin per Bauble x Number of Baubles) + (Contribution margin per Trinket x Number of Trinkets)
Total contribution margin = (15 - 10)B + (5 - 2)T
Total contribution margin = 5B + 3T

Total fixed costs = $198,000

We know that the sales mix (the proportion of Baubles to Trinkets sold) remains constant at 2:1. Therefore, we can calculate the number of Baubles sold by setting up the following equation:
B / T = 2 / 1
T = 0.5B

Substituting T = 0.5B into the equation for total contribution margin, we get:
Total contribution margin = 5B + 3(0.5B)
Total contribution margin = 6.5B

Setting the total contribution margin equal to the total fixed costs, we get:
6.5B = $198,000
B = 30,461.54

Since we can only sell whole units of Baubles, we must round down to get the number of Baubles sold at the break-even point.
Number of Baubles sold at the break-even point = 30,000
Therefore, the answer is (C) 6,600.