Answer (B) is correct . A composite unit for MetalCraft consists of the proportions 30:75:45, representing percentages of 20%, 50%, and 30%. The per-product contribution margins that will be weighted are $4.50 ($10.00 – $5.50), $7.00 ($15.00 – $8.00), and $6.00 ($20.00 – $14.00). The weighted UCM is therefore $6.20 [($4.50 × 20%) + ($7.00 × 50%) + ($6.00 × 30%)]. The total of fixed costs and target operating income is $1,122,200 ($961,000 + $161,200). The breakeven point in composite units can be found by dividing this total target amount by the weighted UCM ($1,122,200 ÷ $6.20 = 181,000). Since Model 153 represents 30% of this, the total of that model produced will be 54,300 (181,000 × 30%).
Answer (A) is incorrect because The total of all three models that must be sold to cover only the desired operating income and not cover fixed costs is 26,000.
Answer (C) is incorrect because The total of all three models that must be sold to cover only the fixed costs and not cover the desired operating income is 155,000.
Answer (D) is incorrect because The total of all three models that must be sold is 181,000.
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Total fixed costs for the socket wrench product line is $961,000. If the company’s actual experience remains consistent with the estimated sales volume percentage distribution, and the firm desires to generate total operating income of $161,200, how many Model No. 153 socket sets will MetalCraft have to sell?