13.35 Keep or drop; multiple product breakeven; qualitative factors LO3, 6 Horton and Associates produces two products named the Big Winner and the Loser. Last month 1000 units of the Loser and 4000 units of the Big Winner were produced and sold. Average prices and costs for the two products for last month follow: Loser Big Winner Selling price $95 $225 Direct materials 40 Direct labour Variable overhead Product Ine fixed costs 10 Corporate fixed costs 25 Average margin per unit STO CHAPTER 13 Relevant costs for decision making 431 John Wiley & Sons Australla, Lid. Not for resale or distribution. Any unauthorised distribution or use will result in legal action The production lines for both products are highly automated, so large changes in production cause very little change in total direct labour costs. Workers, who are classified as direct labour. monitor the production line and are permanent employees who regularly work 40 hours per week. All costs other than corporate fixed costs listed under each product line could be avoided if the product line was dropped. Corporate fixed costs totalled $125 000, and the total sales amounted to 5000 units, producing the average cost per unit of $25. About $10 000 of the corporate fixed costs could be avoided if the Loser was dropped, and about $15000 of the corporate fixed costs could be avoided if the Big Winner was dropped. The remaining $100 000 could be avoided only by going out of business entirely. Required (a) What is the overall corporate breakeven in total sales revenue, assuming the sales mix is the same as last month's? (b) What is the breakeven sales volume (in units produced and sold) for the Loser? (In other words. what is the sales volume at which Horton should be financially indifferent between dropping and retaining the Loser?) (c) List at least two qualitative factors that would affect the decision to keep or drop the Loser