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Wildhorse Corporation sells three different models of a mosquito “zapper.” Model A12 sells for
unit variable costs of
sells for
models is A12, 60%; B22, 15%; and C124, 25%.
If the company has fixed costs of
break even? (Round Per unit values to 2 decimal palces, e.g. 15.25 and final answers to 0 decimal
places, e.g. 5,275.)
Model
A12
B22
C124
Total break-even point
Wildhorse Corporation sells three different models of a mosquito “zapper.” Model A12 sells for
unit variable costs of
sells for
models is A12, 60%; B22, 15%; and C124, 25%.
If the company has fixed costs of
break even? (Round Per unit values to 2 decimal palces, e.g. 15.25 and final answers to 0 decimal
places, e.g. 5,275.)
Model
A12
B22
C124
Total break-even point
Ask by Savage Mullins. in the United States
Mar 15,2025
Upstudy AI Solution
Tutor-Verified Answer
Answer
To break even, Wildhorse Corporation must sell:
- 3,420 units of Model A12,
- 855 units of Model B22, and
- 1,425 units of Model C124.
This totals 5,700 weighted units.
Solution
Let
For each model, we first calculate the contribution margin per unit.
Model A12:
Model B22:
Model C124:
The sales mix (as a percentage of total units sold) for each model is as follows:
- Model A12: 60%
- Model B22: 15%
- Model C124: 25%
The weighted average contribution margin per unit is computed as
Calculating each term:
Thus,
The break‐even point in weighted units is given by
Now, the break‐even quantity for each model is determined by applying the sales mix:
Model A12:
Model B22:
Model C124:
Thus, the company must sell
-
units of Model A12, -
units of Model B22, and -
units of Model C124
to break even with a total of
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Simplify this solution Bonus Knowledge
To determine the break-even point for Wildhorse Corporation, we first need to calculate the contribution margin for each model based on their selling prices and variable costs.
The contribution margin (CM) for each model can be calculated as follows:
- Model A12: CM =
- Model B22: CM =
- Model C124: CM =
Next, we need to calculate the weighted average contribution margin based on the sales mix:
- The sales mix contributions:
- A12 contribution:
- B22 contribution:
- C124 contribution:
- A12 contribution:
Sum of contributions:
- Total weighted average contribution margin =
To find the total break-even point in dollars:
- Total Fixed Costs =
- Break-even point in units =
units
Now, we allocate these units according to the sales mix:
- For A12: 60% of 5,695 =
units - For B22: 15% of 5,695 =
units - For C124: 25% of 5,695 =
units
Final answers rounded:
- Model A12: 3,417
- Model B22: 855
- Model C124: 1,424
- Total break-even point: 5,695 units
