# What is the per unit contribution margin for each of the two models

Perrson Company makes two types of backpacks. Data for the companys activity during a typical month are presented below:

School

Hiker

Model

Model

Sales units

40,000

40,000

Selling price per unit

$6

$18

Variable expense per unit

$2

$10

The companys total fixed expenses are $80,000. There are no beginning or ending inventories.

A. What is the per unit contribution margin for each of the two models?

B. What is the break-even point in terms of sales dollars if the sales mix remains constant?

Break-even point (in sales) = Fixed cost * selling price per unit

Contribution margin

C. If the sales mix is changed to 60,000 units of

the school model and 20,000 units of the hiker model, what will be the

break-even point in terms of sales dollars?