2 8 9 3 Most businesses sell several products at varying prices. The products often have different unit variable costs. 4 Thus, the total profit and the breakeven point depend on the proportions in which the products are sold 5 Sales mix is the relative contribution of sales among various products sold by a firm. Assume that the sales 6 of Jameson Ltd. for a typical year are as follows: 7 Product Units Sold Sales Mix 17.250 75% 10 Z 5,750 25% 11 Total 23,000 100% 12 13 Assume the following unit selling prices and unit variable costs: 14 15 Product Selling Price Per Unit Variable Cost Per Unit Contribution 16 X $90 $70 $20 17 Z $150 $105 $45 18 19 Fixed costs are $425,000 per year. Assume that the sales mix, expressed in terms of relative physical units 20 sold, is constant as sales volume changes. 21 22 Required: 24 1) Determine the breakeven point in total units and for this breakeven point, calculate the number of 25 units of X and Z that must be sold. Use the weighted average contribution margin approach and 26 round solution up to the next whole number. 28 2) Determine the breakeven point in total units and the breakdown of the total breakeven point into 29 sales (in units) of each of the two products, X and Z. Use the sales basket approach. 30 (Assume that each "basket" consists of four units in X and one unit of Z.) 32 3) Determine the overall breakeven point in terms of sales dollars based on the weighted-average contribution margin ratio (CMR). Hint: The weights for calculating the weighted-average CMR are based on relative sales dollars, not units, of the two products. Break down the total sales dolars breakeven point into sales dollars for product X and sales dollars for product Z. 4) Explain the following statement: "For the multiproduct firm, there is no breakeven point 41 independent of the sales-mix assumption." 33 34 35 37 38 40 43 44 45 46 47 48 49 50