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jene277 jene277
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2 months ago
A company produces Product 11 and Product 22. Product 11 sells for $20 and has a contribution margin ratio of 60%. Product 22 sells for $30 and has a contribution margin ratio of 60%. This year the company sold 1,500 units of Product 11 and 2,500 units of Product 22. At the break-even point, the company needs to sell 1,275 units of Product 11. What are the company's fixed costs?

▸ $52,020

▸ $53,550

▸ $32,130

▸ $48,450
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Managerial Accounting

Managerial Accounting


Edition: 4th
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Aldrich E.Aldrich E
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$53,550

Product 11 CM/unit = $20 × 60% = $12; Product 22 CM ÷ unit = $30 × 60% = $18;
1,500 ÷ (1,500 + 2,500) = 37.5%; 2,500 ÷ (1,500 + 2,500) = 62.5%
At break-even 0.375x = 1,275 units of Product 11, so "x" = 3,400
0.625 × 3,400 = 2,125 units of Product 22
(1,275 × $12) + (2,125 × $18) - FC = $0; FC = $53,550
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Smart ... Thanks!
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