mMCQ.

Navigation Menu

Step into mMCQ.

Launch mMCQ. diagnostic

Explore mMCQ.

MDCAT prepFree DiagnosticPricing & SubscribeSign in

Resources

Terms & Conditions

mMCQ.

© 2021 - 2025 mMCQ.All rights reserved.

WhatsApp
A Level Accounting (9706)•9706/11/M/J/19
Question 26 from 9706/11/M/J/19

Explanation

Multi-product break-even using contribution margin

Steps:

  • Calculate contribution margin for X: 10−10 - 10−4 = $6 per unit.
  • Total contribution from 4,000 units of X: 4,000 × 6=6 = 6=24,000.
  • Remaining fixed costs to cover: 44,000−44,000 - 44,000−24,000 = $20,000.
  • Contribution margin for Y: 12−12 - 12−8 = $4 per unit.
  • Units of Y needed: 20,700/20,700 / 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 20,700contribution,plus20,700 contribution, plus 20,700contribution,plus24,000 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 14,160fromY,totalcontribution14,160 from Y, total contribution 14,160fromY,totalcontribution38,160 < fixed costs.
  • B. 3,575 units yield 14,300fromY,total14,300 from Y, total 14,300fromY,total38,300 < fixed costs.
  • D. 11,175 units yield $44,700 from Y alone, ignoring X contribution and overestimating needs.

Final answer: C

Topic: Costs and cost behaviour

Practice more A Level Accounting (9706) questions on mMCQ.me