As Zapo increases its percentage of new customers, which have a higher/lower contribution margin per unit than upgrade customers, the number of bundles required to break-evendecreases/Increases.

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Zapo 1-2-3 is a top-selling electronic spreadsheet product. Zapo is about to release version 5.0. It divides its customers into two groups: new customers and upgrade customers (those who previously purchased Zapo 1-2-3, 4.0 or earlier versions). Although the same physical product is provided to each customer group, sizable differences exist in selling prices and variable marketing costs: (Click the icon to view the price and cost information.) The fixed costs of Zapo 1-2-3 version 5.0 are $13,500,000. The planned sales mix in units is 60% new customers and 40% upgrade customers. Required C Requirement 1. What is the Zapo 1-2-3 version 5.0 breakeven point in units, assuming that the planned 60/40 sales mix is attained? The breakeven point is 55862 units for new customers and 56842 units for upgrade customers. Requirement 2. If the sales mix is attained, what is the operating income when 170,000 units are sold? The operating income is if the sales mix is attained and 170,000 units are sold. Requirement 3. Show how the breakeven point in units changes with the following customer mixes: a. New 50% and Upgrade 50% and b. New 80% and Upgrade 20%. a. Begin by determining the sales mix for scenario "a." The breakeven point is units bundles. This translates to a breakeven point of units for upgrade customers. for new customers and b. Now, determine the sales mix for scenario "b." The breakeven point is bundles. This translates to a breakeven point of for new customers and units for upgrade customers. units c. Comment on the results. As Zapo increases its percentage of new customers, which have a contribution margin per unit than upgrade customers, the number of bundles required to break even New Customers Upgrade Customers $ 225 $ 120 Selling price Variable costs Manufacturing Marketing $ 20 $ 20 60 80 5 25 $ 145 $ 95 Contribution margin