ABC sells three products: Red, Blue and Yellow.The company has annual fixed costs of $ 280,000.

Last year, the company sold 4000 products in the ratio of 1:2:2.The accounting department has compiled the following data related to

the three products:

Red

BlueYellowPrice per product

$12

$18

$13

Variable cost per product

$7

$10

$9

Required:

(a) Calculate the total number of products that must be sold for the company to break even?

(b) Calculate the number of products of Red, Blue and Yellowthat must be sold to break even?

(c) How might ABC reduce its break even point?

(d) List any three assumptions that managers must make in CVPcalcuationsand how are they critical to decision making.