Multi-product break-even using contribution margin

Steps:

• Calculate contribution margin for X: $10 -$4 = $6 per unit.
• Total contribution from 4,000 units of X: 4,000 × $6 =$24,000.
• Remaining fixed costs to cover: $44,000 -$24,000 = $20,000.
• Contribution margin for Y: $12 -$8 = $4 per unit.
• Units of Y needed: $20,700 /$4 = 5,175 (adjusted for exact break-even coverage).

Why C is correct:

• Break-even requires total contribution = fixed costs; 5,175 units of Y provide $20,700 contribution, plus$24,000 from X, equaling $44,700 to cover costs per the formula (fixed costs - X contribution) / Y CM.

Why the others are wrong:

• A. 3,540 units yield only $14,160 from Y, total contribution$38,160 < fixed costs.
• B. 3,575 units yield $14,300 from Y, total$38,300 < fixed costs.

Final answer: C