Answer:
Break-even point (units)= 800 units
Explanation:
Giving the following information:
The average selling price and variable cost for each product are as follows:
Selling price per green yarn $15
Selling price blue yarn $18
Variable cost per green yarn $12
Variable cost per blue yarn $14
Fixed costs $2,800
To calculate the break-even point in units we need to use the following formula:
Break-even point (units)= Total fixed costs / (weighted average selling price - weighted average variable expense)
weighted average selling price= 15*0.5 + 18*0.5= $16.5
weighted average variable expense= 12*0.5 + 14*0.5= $13
Fixed costs= 2,800
Break-even point (units)= 2,800/ (16.5 - 13)= 800 units
