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Gabe Industries sells two​ products, Basic models and Deluxe models. Basic models sell for $ 45 per unit with variable costs of $ 35 per unit. Deluxe models sell for $ 49 per unit with variable costs of $ 40 per unit. Total fixed costs for the company are $ 617. Gabe Industries typically sells four Basic models for every Deluxe model. What is the breakeven point for Basic models and Deluxe​ models? (Round any intermediary calculations to the nearest cent and your final answers to the nearest whole​ unit.)A. 35 units of Basic; 46 units of Deluxe B. 11 units of Basic; 55 units of Deluxe C. 55 units of Basic; 11 units of Deluxe D. 46 units of Basic; 35 units of Deluxe

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Answer:

The answer is: 50 basic units and 13 deluxe units

Explanation:

                                     Basic model            Deluxe model               Total

Sales price                       $45                           $49

Variable costs                  $35                           $40

Contribution margin        $10                            $9

× Sales Mix                        4                                 1                                 5

Total contribution m.       $40                           $9                              $49

Weighted contribution margin = total contribution margin / units = $49 / 5

Weighted contribution margin = $9.8

Break even point  = total fixed costs / weighted contribution margin

Break even point = $617 / $9.8 = 62.96 units ≈ 63 units

  • basic units = 63 x 80% = 50.4 ≈ 50 units
  • deluxe units = 63 x 20% = 12.6 ≈ 13 units

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