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Answer :
Oriole Company would sell 65,000 units of the Standard product at the break-even point. To calculate the break-even point, we need to equate the total revenue with the total costs.
The total revenue is the product of the unit contribution margin and the number of units sold. Let's calculate the total contribution margin first:
Standard product contribution margin = 20,000 units * $30 = $600,000
Supreme product contribution margin = 80,000 units * $30 = $2,400,000
Total contribution margin = $600,000 + $2,400,000 = $3,000,000
Now, let's calculate the break-even point using the formula:
Fixed expenses = Total contribution margin
$1,950,000 = $3,000,000 - (Standard product break-even sales * $30)
Solving for Standard product break-even sales:
$30 * Standard product break-even sales = $3,000,000 - $1,950,000
$30 * Standard product break-even sales = $1,050,000
Standard product break-even sales = $1,050,000 / $30 = 35,000 units
Therefore, Oriole Company would sell 35,000 units of the Standard product at the break-even point.Oriole Company would need to sell 65,000 units of the Standard product at the break-even point to cover its fixed expenses of $1,950,000.
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