Instructions are listed below.
Explanation:
Giving the following information:
DVDs:
Price= 8
Unitary variable cost= 4
Units sold= 13,500
Equipment:
Price= 25
Unitary variable cost= 15
Units sold= 4,500
Yoga mats:
Price= 19
Unitary variable cost= 12
Units sold= 9,000
The total fixed cost is $105,120
First, we need to calculate the sales mix for each product:
Total sales in units= (13,500 + 4,500 + 9,000)= 27,000 units
Sales mix:
DVDs= 13,500/27,000= 0.5
Equipment= 4,500/27,000= 0.17
Yoga Mats= 9,000/27,000= 0.33
To calculate the break-even quantity for each product, first, we need to calculate the break-even point in units for the whole company:
Break-even point (units)= Total fixed costs / (weighted average selling price - weighted average variable expense)
weighted average selling price= (selling price* weighted sales participation)
weighted average selling price= (8*0.5 + 25*0.17 + 19*0.33)= $14.52
weighted average variable cost= (variable cost* weighted sales participation)
weighted average variable cost= (4*0.5 + 15*0.17 + 12*0.33)= $8.51
Break-even point in units= 105,120/ (14.52 - 8.51)= 17,491 units
Now, for each product:
DVDs= 17,491*0.5= 8,746
Equipment= 17,491*0.17= 2,973
Yoga mats= 17,491*0.33= 5,772
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