Varigon Co. produces and sells three products-Household, Commercial, and Industrial, and has total fixed costs of $52,000. Sales and cost data follow:HouseholdCommercialIndustrialSales price per unit………………$6$8$10Variable costs per unit……………467Sales mix……………..…………321Calculate the break-even point in composite units.
What will be an ideal response?
Composite Sales Price
| Household 3 ? $6 | = $18 |
| Commercial 2 ? $8 | = $16 |
| Industrial 1 ? $10 | = $10 |
| $44 |
| Household 3 ? $4 | = $12 |
| Commercial 2 ? $6 | = $12 |
| Industrial 1 ? $7 | = $ 7 |
| 31 |
| Composite Contribution Margin | $13 |
Break-even point in composite units = $52,000/$13 = 4,000 composite units
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