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    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?

    © BrainMass Inc. brainmass.com June 4, 2020, 12:34 am ad1c9bdddf
    https://brainmass.com/business/financial-ratios/contribution-margin-ratio-break-even-point-dollar-sales-346284

    Solution Preview

    Contribution per unit on sales mix = 75% of $10 + 25% of $40 = 7.5 + 10 = ...

    Solution Summary

    The solution computes contribution margin ratio; break-even point in dollar sales for Tremont Company.

    $2.19

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