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Joseph Co. has three products A, B, and C, and its fixed costs are $69,000. The
sales mix for its products are 3 units of A, 4 units of B, and 1 unit of C. Information
about the three products follows:
(a) Calculate the company's break-even point in composite units and sales dollars.
(b) Calculate the number of units of each individual product to be sold at the break-
even point.
Feedback:
(a) Break-even point in composite units = $69,000/$92 = 750 composite units
Break-even point in sales dollars = 750 x $280 = $210,000
(b) At break-even point:
750 x 3 = 2,250 units of A
750 x 4 = 3,000 units of B
750 x 1 = 750 units of C
AACSB: Analytic
AICPA BB: Resource Management
AICPA FN: Measurement
Bloom's: Apply
Difficulty: Hard
Learning Objective: P4 Compute the break-even point for a multiproduct company.
171. Thomas Co. produces and sells Ultra, Super, and Mega, and has total fixed costs
of $52,000. Sales and cost data follow:
Calculate the break-even point in composite units.
Feedback:
Break-even point in composite units = $52,000/$13 = 4,000 composite units