Answer:
The break even point in units is 3750 units.
Explanation:
The composite break even point is the break even point in units calculated for a business having more than 1 product. The composite break even point is calculated by dividing the fixed costs by the weighted average contribution per unit.
Break even point in units = Fixed cost / Weighted average contribution per unit
The weighted average contribution per unit can be calculated using the following formula:
Weighted average CM per unit = (Weight of Product X in sales mix * Contribution per unit of Product X) + (Weight of Product Y in sales mix * Contribution per unit of Product Y)
Total units in sales mix = 2 of X + 1 of Y = 3
Contribution margin per unit = Selling price per unit - Variable cost per unit
Weighted average contribution per unit = [ 2/3 * (15 - 2.5) + 1/3 * (25 - 10)]
Weighted average contribution per unit = $13.33333333 per unit
Break even point in units = 50000 / 13.33333333
Break even point in units = 3750 Units
