Chapter 3, Problem 7PA

Manatoah Manufacturing produces 3 models of window air conditioners: model 101, model 201, and model 301. The sales price and variable costs for these three models are as follows:

The current product mix is 4:3:2. The three models share total fixed costs of $430,000.

1. Calculate the sales price per composite unit.
2. What is the contribution margin per composite unit?
3. Calculate Manatoah’s break-even point in both dollars and units.
4. Using an income statement format, prove that this is the break-even point.