Answer
Breakeven Point in Units = $255,000 \div $1.70 ≈ 150,000 units
Work Step by Step
The weighted average contribution margin is calculated as follows:
Weighted Average Contribution Margin = (Contribution Margin A * Sales Mix A) + (Contribution Margin B * Sales Mix B) + (Contribution Margin C * Sales Mix C)
Given:
Contribution Margin A = $3$
Contribution Margin B = $2$
Contribution Margin C = $1$
Sales Mix A = 20,000 units $\div$ 200,000 units = 0.10
Sales Mix B = 100,000 units $\div $ 200,000 units = 0.50
Sales Mix C = 80,000 units $\div$ 200,000 units = 0.40
Weighted Average Contribution Margin = ($3 \times 0.10) + (2 \times 0.50) + (1 \times 0.40) = 0.30 + 1.00 + 0.40 = 1.70$
Breakeven Point in Units = Fixed Costs $ \div $Weighted Average Contribution Margin
