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Break-Even Point in Units for a Multiple-Product Firm Suppose that Chillmax Company now sells both pairs of shoes and fabric carryalls. The pairs of shoes
Break-Even Point in Units for a Multiple-Product Firm Suppose that Chillmax Company now sells both pairs of shoes and fabric carryalls. The pairs of shoes are priced at $60 and have variable costs of $21 each. The carryalls are priced at $36 and have variable costs of $9 each. Total fixed cost for Chillmax as a whole equals $91,500 (includes all fixed factory overhead and fixed selling and administrative expense). Next year, Chillmax expects to sell 3,500 pairs of shoes and 875 carryalls. Required: 1. Form a package of shoes and carryalls based on the sales mix expected for the coming year. Package Unit Variable Unit Contribution Sales Unit Contribution Cost = Margin X Mix = Margin 21 $ 39 4 156 36 9 27 1 27 183 Product Price < Shoes 60 Carryall Package total 2. Calculate the break-even point in units for pairs of shoes and for carryalls. Break-Even Pairs of Shoes 2,346 units Break-Even Carryalls units 2,500 11:54 PM
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