Revenue mix, new and upgrade customers. Zapo 1-2-3 is a top-selling spreadsheet product.

Zapo is about to release Version 5.0. It groups its customers into two groups: new customers and upgrade customers (those who previously purchased Zapo 1-2-3 Version 4.0 or earlier).

Although the same physical product is provided to each customer group, sizable differences exist in their selling prices and variable marketing costs:

New Upgrade Customers Customers Selling price $252 $144 Variable cost:

Manufacturing $30 $30 Marketing 78 108 18 48 The fixed costs of Zapo 5.0 are $16,800,000.

The planned revenue mix in units is 60% new customers and 40% upgrade customers.

Required 1. What is the Zapo 1-2-3 Version 5.0 breakeven point in units, assuming that the planned 60/40 mix is maintained?
2. If the mix is maintained, what is the operating income when 200,000 units are sold?
3. Show how the breakeven point in units changes with the following customer mixes:

a. New 50%/upgrade 50%

b. New 90%/upgrade 10%
Comment on the results.