CPAnet Forum: BEC question

Active Topics

Memberlist

Help

BEC STUDY GROUP
CPAnet Forum : BEC STUDY GROUP

Topic: BEC question (

Topic Closed)

Author

Message

<< Prev Topic | Next Topic >>

emuleiii
Newbie
Newbie

Joined: 01 Apr 2008
Online Status: Offline
Posts: 35

Posted: 14 Jul 2011 at 12:29 \| IP Logged

can anyone please help answer this question

A company produces and sells 2 products. The first product accounts for 75% of sales and the second product accounts for the remaining 25% of sales. The first product has a selling price of $10 per unit, variable costs of $6 per unit, and allocated fixed costs of $100,000. The second product has a selling price of $25 per unit, variable costs of $13 per unit, and allocated fixed costs of $212,000. at the break even point , what number of units of the first product will have been sold ?

a 52,000
b 39,000
c 25,000
d 14,625

the answer is B but I got D somehow, any advise would be appreciated

studentcpa
Contributor

Joined: 25 Jun 2010
Online Status: Offline
Posts: 62

Posted: 14 Jul 2011 at 13:16 \| IP Logged

I worked this question, this way..Assume total sales to
be "x".Based on the product mix, first product sales =
0.75x, second product = 0.25x. At break even, fixed cost
equals contribution. Total fixed cost is $312,000.
Contribution p.u of first product, will be $4 and second
product is $12 p.u.

So, 0.75x *$4+0.25x* $12=$312,000. Solving for x, you get
total sales as $52000 and 75% of total sales is first
product sales= $39,000.

Hope this helps

__________________
Colorado Board-NASBA
FAR-86- Nov 2010
AUD-92- Feb 2011
REG-90-May 2011

Sorry, you can NOT post a reply.
This topic is closed.

Printable version

You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot delete your posts in this forum
You cannot edit your posts in this forum
You cannot create polls in this forum
You cannot vote in polls in this forum