Contribution margin ratio; break-even point in dollar sales
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The Tremont Company makes and sells two products, as follows:
For product A:sales price per unit is $40, Variable cost is 30, contribution margin per unit is $10.
For Product B: sales price per unit is $100, Variable cost per unit is 60, contribution margin per unit is $40.
The Tremont Company expects to incur annual fixed costs of $175,000. The relative sales mix of the products is 75% of A and 25% of unit of B.
1) Determine the total number of units of products (A and B combined) that Tremont must sell to break even.
2) What is the number of units of A and of B that Tremont would expect to sell at the break-even point?
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Solution Summary
The solution computes contribution margin ratio; break-even point in dollar sales for Tremont Company.
Solution Preview
Contribution per unit on sales mix = 75% of $10 + 25% of $40 = 7.5 + 10 = ...
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