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MC Qu. 157 McCoy Brothers manufactures and sells... McCoy Brothers manufactures and sells two products, A and Z in the ratio of 5:2. Product A sells for $84; Z sells for $105. Variable costs for product A are $41; for Z $45. Fixed costs are $482,400. Compute the number of units of Product A McCoy must sell to break even.

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Answer:

7,200 units

Explanation:

The computation of the no of units for break even for product A is given below:

But before that the contribution margin for the sales mix is

Particulars                 product A     product Z

Selling price           $84                 $105

Less:

variable cost          -$41                 -$45

Contribution margin $43               $60

Sales mix                  5                     2

CM sales mix             $215            $120

Total                                 $335

Now the break even sales in total is

= $482,400 ÷ 335

= 1,440 units

Now for product A, it is

= 1,440 × 5

= 7,200 units

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