CMA Study Group

hi dears

Question: 22

Mason Enterprises has prepared the following budget for the month of July: Selling Price Variable Cost Unit

Per Unit Per Unit Sales Product A $10.00 $4.00 15,000 Product B 15.00 8.00 20,000 Product C 18.00 9.00 5,000 Assuming that total fixed costs will be $150,000 and the mix remains constant, the breakeven point (rounded to the next higher whole unit) will be

A. 21,429 units. B. 20,455 units. C. 6,818 units. D. 21,819 units

why the answer d

i am try to solve as it is 

                                           a       b          c
cm                                       6      7           9
weighted average            .375    .175      .225            

i am get the weighted averge as 15+20+5= 40  so a= 6/40 =.375 and so on

then wa cm per unit = (6*.375+7*.175+9*.225) = 5.5
when i divided on 150000/5.5 =27272 units 

where the wrong on my solution




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Sameh Mahmoud Ismail
Accountant
Giza
Egypt
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I'm just starting Part 2 and haven't gotten to this section yet but if you are using Weighted average, to get answer D you will need to get the total sales for each product, sum them up and divide that total by the total # units. This will give you the weighted average CM. Then you divide the fixed cost by this weighted  average contribution margin and that's how you get D

Total sales = CM * Number of Units sold
Product A = (10-4) * 15,000 = 90,000
Product B = (15-8) * 20,000 = 140,000
Product C = (18-9) * 5,000 = 45,000
Total sales = 90,000 + 140,000 + 45,000 = 275,000
Total units = 15,000 + 20,000 + 5,000 = 40,000
​Weighted average Contribution Margin/unit = 275,000/40,000 = $6.875/unit
Break Even = FC/CM = 150,000/6.875 = 21,818 - answer D

​

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Laurence Heraux
Director/Manager
Chula Vista CA
United States
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Dear Samesh,

For getting weighted Average you must apply sales % to Per Unit Contribution as Sales Mix has given.

Based on that you will get the ans  21818.18 Units as BEP quantity is being asked.

Hope this will help you.


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SUDHIR LEVI
Chief Financial Officer
New Delhi
India
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Hi Sameh, 

Total Units = 40,000

Product A  = 15,000 / 40,000 = 0.375
Product B  = 20,000 / 40,000 = 0.50
Product A  =   5,000 / 40,000 = 0.125

WACM = 6 * 0.375 + 7 * 0.50 + 9 * 0.125 = 2.25 + 3.5 + 1.125 = 6.875

Breakeven Units = 150,000 / 6.875 = 21,818

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Brian Ruskolekier
Controller
Buenos Aires
Argentina
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