Benjamin Co. has three products A, B, and C, and its fixed costs are $69,000. The sales mix for its products are 3 units of A, 4 units of B, and 1 unit of C. Information about the three products follows:?ABCProjected sales in dollars…………$192,000$192,000$64,000Selling price per unit………………$40$30$40Contribution margin ratio………… 30% 35% 35%(a) Calculate the company's break-even point in composite units and sales dollars.(b) Calculate the number of units of each individual product to be sold at the break-even point.
What will be an ideal response?
| 3 units of A at $40 each…………………… | $120 |
| 4 units of B at $30 each…………………… | 120 |
| 1 unit of C at $40 each…………………… | 40 |
| Selling price of a composite unit………… | $280 |
| Contribution margin of A ($120 ? 30%)……………… | $36 |
| Contribution margin of B ($120 ? 35%)……………… | 42 |
| Contribution margin of C ($40 ? 35%)……………… | 14 |
| Contribution margin of composite unit……………… | $92 |
Break-even point in composite units = $69,000/$92 = 750 composite units
Break-even point in sales dollars = 750 ? $280 = $210,000
| (b) At break-even point: | 750 ? 3 = 2,250 units of A |
750 ? 1 = 750 units of C
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