Wallace Industrial sells two products, large forklifts and small forklifts. A large forklift sells for $50,000 per unit with variable costs of $26,000 per unit. Small forklifts sell for $30,000 per unit with variable costs of $12,000 per unit
Total fixed costs for the company are $1,600,000. Wallace Industrial typically sells one large forklifts for every two smalls. What is the breakeven point in total units?
A) 80 units
B) 400 units
C) 30 units
D) 27 units
A
Explanation: A)
Large Small Total
Sales $50,000 $30,000
Variable Costs 26,000 12,000
Contribution Margin 24,000 18,000
× Sales Mix 1 2 3
Contribution margin $24,000 $36,000 $60,000
Contribution Margin $60,000 / 3 Sales Mix = $20,000 Weighted CM
Fixed costs $1,600,000 / 20,000 = 80 BE units
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