See correct answer. See correct answer. Company Company 1 2 Selling price $3.00 $3.00 Variable cost 1.80 2.40 Contribution margin $1.20 .60 1) The breakeven point in units for Company 1 is $960,000 ÷ $1.20 = 800,000. 2) The breakeven point in units for Company 2 is $252,000 ÷ $.60 = $420,000. 3) To determine the single quantity of units that will result in the same profits for both companies, develop profit formulas for both companies, set them equal to one another and solve for the unknown, which is the number of units sold. The profit formula to use for both companies is: Profit = (Unit Contribution Margin × Number of Units Sold) ? Fixed Costs where the Number of Units Sold is the unknown. 1.20X ? 960,000 = Company 1's Profit .60X ? 252,000 = Company 2's Profit Setting the two equations equal to one another: 1.20X ? 960,000 = 0.60X ? 252,000 Solving for X: Subtract .60X from both sides of the equation: .60X ? 960,000 = ? 252,000 Add 960,000 to both sides of the equation: .60X = 708,000 Divide both sides of the equation by .60: X = 1,180,000 See correct answer.
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