Answer:
B. 980 units
Explanation:
Note: This question is not complete. The full question is therefore presented before answering the question as follows:
Mayfield Company sells two products, Blue models and Plaid models. Blue models sell for $40 per unit with variable costs of $20 per unit. Plaid models sell for $54 per unit with variable costs of $25 per unit. Total fixed costs for the company are $24,500. Mayfield Company typically sells four Blue models for every four Plaid models. What is the breakeven point in total units? (Round any intermediary calculations to the nearest whole number).
A. 211 units
B. 980 units
C. 125 units
D. 3,063 units
The explanation of the answer is now given as follows:
Note: See the attached excel file for the calculation of the total contribution margin and total sales mix.
From the excel file, we have:
Total contribution margin = $196
Total sales mix = $8
We can now calculate weighted contribution margin as follows:
Weighted contribution margin = Total contribution margin / Total sales mix = $196 / 8 = $24.5, or $25 rounded to the nearest whole number
Therefore, we have:
Breakeven point in total units = Total fixed costs / Weighted contribution margin = $24,500 / $25 = 980 units
Therefore, the option is B. 980 units.
