Nofly corporation sells three different models of a mosquito "zapper." model a12 sells for $50 and has variable costs of $35. model b22 sells for $100 and has variable costs of $70. model c124 sells for $400 and has variable costs of $300. the sales mix of the three models is a12, 60%; b22, 15%; and c124, 25%. if the company has fixed costs of $269,500, how many units of each model must the company sell in order to break even?

The first step you need to do to solve this problem is to calculate the contribution margin per unit for each model:

Model                                                                                   a12                         b22                         c124

Sales Price per unit                                                          50                           100                         400

Less: Variable Cost per unit                                         35                           70                           300

Contribution Margin per unit                                      15                           30                           100

The next step is to calculate the weighted-average contribution margin per unit for the sales mix using the following formula:

Model a12 CM per Unit × Model a12 Sales Mix Percentage
+ Model b22 CM per Unit × Model b22 Sales Mix Percentage
+ Model c124 CM per Unit × Model c124 Sales Mix Percentage
= Weighted Average Unit Contribution Margin (WACM)

Contribution Margin per unit                                      15                           30                           100

X Sales Mix Percentage                                                 60%                        15%                        25%

WACM                                                                                  9                              4.5                          25

Weighted Average Unit Contribution Margin (sum)                         38.5

The next step is to find the break-even point using the WACM.

The next step is to calculate the number of units of each model at break-even point

answerbuying in bulk;