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Information about two products is as follows:  Product AProduct B Selling price per unit$20$25 Variable costs per unit  11  18 Contribution margin per unit $ 9 $ 7Sixty percent of sales in units are expected to be product A.   Fixed costs are expected to be $82,000.   Breakeven in units would be:Question 4Select one:a.3,000 units Product A; 2,000 units Product Bb.6,000 units Product A; 4,000 units Product Bc.18,000 units Product A; 14,000 units Product Bd. 2,460 units Product A; 1,312 units Product Be.1,200 units Product A; 800 units Product B

Question

Information about two products is as follows:  Product AProduct B Selling price per unit202025 Variable costs per unit  11  18 Contribution margin per unit 9  7Sixty percent of sales in units are expected to be product A.   Fixed costs are expected to be $82,000.   Breakeven in units would be:Question 4Select one:a.3,000 units Product A; 2,000 units Product Bb.6,000 units Product A; 4,000 units Product Bc.18,000 units Product A; 14,000 units Product Bd. 2,460 units Product A; 1,312 units Product Be.1,200 units Product A; 800 units Product B

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Solution

To calculate the breakeven point in units, we first need to calculate the weighted average contribution margin per unit.

The contribution margin per unit is the selling price per unit minus the variable cost per unit. For Product A, this is 2020 - 11 = 9.ForProductB,thisis9. For Product B, this is 25 - 18=18 = 7.

Since 60% of sales are expected to be Product A and 40% are expected to be Product B, we can calculate the weighted average contribution margin per unit as follows:

(0.60 * 9)+(0.409) + (0.40 * 7) = 5.40+5.40 + 2.80 = $8.20

Next, we divide the total fixed costs by the weighted average contribution margin per unit to find the total breakeven point in units:

82,000/82,000 / 8.20 = 10,000 units

To find the breakeven point in units for each product, we multiply the total breakeven point in units by the percentage of sales expected for each product:

Product A: 10,000 units * 0.60 = 6,000 units Product B: 10,000 units * 0.40 = 4,000 units

So, the answer is b. 6,000 units Product A; 4,000 units Product B.

This problem has been solved

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