[Meadows30]

I know how to calculate the break even units, but what if they give operating income and you need to determine how many units are sold? Question given:

Product A – Selling price $18 Variable costs $12
Product B – Selling price $22 Variable costs $14

Fixed Costs = $38,400
Operating Income = $28,800

Company sells 4 units of A for every unit of B.

How many units sold?

Reg 11/26/2012 80
BEC 01/05/2012
Audit
FAR

[Anthony]

Contribution margin is $67200 (FC + OI)

$67200/$32 = 2100 units

$32 = CM of product A ($6 X 4) + product B ($8 X 1)

2100 units X 4 = 8400
2100 units X 1 = 2100
8400+2100 = 10500 units

[Meadows30]

Thanks this is exactly the answer I was looking for.

Reg 11/26/2012 80
BEC 01/05/2012
Audit
FAR

[Author]

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