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Most businesses sell several products at varying prices. The products often have different unit variable costs. Thus, the total profit and the breakeven point depend
Most businesses sell several products at varying prices. The products often have different unit variable costs. Thus, the total profit and
the breakeven point depend on the proportions in which the products are sold. Sales mix is the relative contribution of sales among
various products sold by a firm. Assume that the sales of Jordan Incorporated for a typical year are as follows:
Assume the following unit selling prices and unit variable costs:
Fixed costs are $ per year. Assume that the sales mix, expressed in terms of relative physical units sold, is constant as sales
volume changes.
Required:
Determine the breakeven point in total units and, for this breakeven point, calculate the number of units of A and that must be
sold. Use the weightedaverage contribution margin approach.
Determine the overall breakeven point in terms of sales dollars based on the weightedaverage contribution margin ratio CMR
Hint: The weights for calculating the weightedaverage CMR are based on relative sales dollars, not units, of the two products. Break
down the total sales dollars breakeven point into sales dollars for product A and sales dollars for product B
Complete this question by entering your answers in the tabs below.
Required
Determine the breakeven point in total units and, for this breakeven point, calculate the number of units of A and that must
be sold. Use the weightedaverage contribution margin approach. Round your answer up to the nearest whole number.
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