Kyle runs a store that sells small and large space heaters. The large heaters sell for $250 each with unit variable costs of $120, while the small space heaters sell for $80 each with unit variable costs of $30. Currently, the small space heaters amount to 2,100 of the units sold, while the large heaters amount to 700 of the units sold. The fixed costs for the store are $126,000. What is the company-wide break-even point in units?

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Rupicapra Rupicapra · Answer 1 · 2018-10-20T07:25:49+02:00

Answer: The company wide break even point in units is 1800.

We follow these steps in order to arrive at the answer:

First we find the Contribution for each product

Heater Selling Price Variable Cost Contribution

Large 250 120 [tex]250-120 =130[/tex]

Small 80 30 [tex]80-30 =50[/tex]

Then, we find the weighted average contribution of the products like this:

Heaters No. of units Contribution Weighted Average

Large 700 130 [tex]130 * \frac{700}{2800} = 32.5[/tex]

Small 2100 50 [tex]50 * \frac{2100}{2800} = 37.5[/tex] Total 2800 70

Finally we calculate the company wide break even point (BEP) as follows:

[tex]BEP_{units} = \frac{Fixed Costs}{Weighted Average Contribution}[/tex]

[tex]BEP_{units} = \frac{126000}{70}[/tex]

BEP in units is 1800 units.

ewomazinoade ewomazinoade · Answer 2 · 2022-03-03T11:56:26+01:00

The company-wide break-even points is 1800.

Breakeven quantity are the number of units produced and sold at which net income is zero.

Breakeven quantity = fixed cost / contribution margin

Contribution margin for the large heaters = $250 - $120 = $130

Weighted contribution margin for the large heaters = (700 / 2800) x $130 = $32.50

Contribution margin for the small heaters = $80 - $30 = $50

Weighted contribution margin for the small heaters = (2100 / 2800) x $50 = $37.50

Sum of contribution margins = 70

Break even point = $126,000 / 70 = 1800

To learn more about breakeven points, please check: https://brainly.com/question/17960037