Mobility Inc. has fixed costs of $510,000. The unit selling price, variable cost per unit, and contribution margin per unit

Mobility Inc. has fixed costs of $510,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company’s two products are provided below.







Product Selling Price Variable Cost per Unit Contribution Margin per Unit
AA $150 $100 $30
BB 100 75 25

The sales mix for products AA and BB is 70% and 30%, respectively. Determine the breakeven point in units of AA and BB.

Answer:


Unit selling price of E: [($150 × 0.70) + ($100 × 0.30)]   = $135.00 
Unit variable cost of E: [($100 × 0.70) + ($75 × 0.30)] =     92.50 
Unit contribution margin of E: $  42.50 
Break-Even Sales (units) = 12,000 units = $510,000 ÷ $42.50 
Break-Even Sales (units) for AA = 12,000 units of E × 70% = 8,400 units of Product AA 
Break-Even Sales (units) for BB = 12,000 units of E × 30% = 3,600 units of Product BB