Question
Cost-Volume-Profit (CVP) Analysis for Target Profit and Sales Mix Decision : A company sells two products, Product X and Product Y. The selling prices, variable
Cost-Volume-Profit (CVP) Analysis for Target Profit and Sales Mix Decision: A company sells two products, Product X and Product Y. The selling prices, variable costs, and contribution margins per unit for each product are as follows:
Product X: Selling price $40, variable cost $20, contribution margin $20
Product Y: Selling price $60, variable cost $30, contribution margin $30
The company has fixed costs of $50,000. Determine the sales mix of Product X and Product Y required to achieve a target profit of $20,000. Discuss how this analysis guides product pricing and production decisions.
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