Question

The Coffee Factory sells two products, supreme and mild. The supreme sells for $120 per case (unit) with variable costs of $90 per unit. The mild sells for $90 per unit with variable costs of $10 per unit. The manager reported $42,600 total fixed costs. The Coffee Factory usually sells three supreme brands for each two mild brands. What is the breakeven point in total units?

Answer 1

Break-even point (units)= 852 units

Step-by-step explanation:

Giving the following information:

The Coffee Factory sells two products, supreme and mild. The supreme sells for $120 per case (unit) with variable costs of $90 per unit. The mild sells for $90 per unit with variable costs of $10 per unit. The manager reported $42,600 total fixed costs. The Coffee Factory usually sells three supreme brands for each two mild brands.

Break-even point (units)= Total fixed costs / (weighted average selling price - weighted average variable expense)

Supreme= 3/5= 0.6

Mild= 2/5= 0.4

weighted average selling price= 120*06 + 90*0.4= 108

weighted average variable expense= 90*0.6 + 10*0.4= 58

Break-even point (units)= 42,600/ (108 - 58) = 852 units