One of the product's price is doubling, and that the break-even analysis should be updated for that.

Using just the suggested change to that product's price change, and calculate a revised break-even point in units for the firm as a whole, using the weighted-average contribution margin approach.

vised

Exhibit 1 Break-even Chart-Total Business 3000 2500 2000 1500 1000 500 of Dollars Thousands 300 Losses 400 Break-even ++ 800 900 + 1600 600 1200 1500 1800 2100 80 90 10 20 30 40 50 60 70 Note: Sales performance in 000s; break-even volume = 1,155,556 units, or $1,387,000 Last Year Margin of Safety 1200 Profits Sales Revenue Total Costs Variable Costs Fixed Costs 2000 2400 100 # of Units $ of Sales % of Capacity Exhibit 2 Product Class Cost Analysis (Normal Year) Aggregate A 2,000,000 1,500,000 600,000 Sales at full capacity (units) Actual sales volume (units) Unit sales price ($) Total sales revenue ($) Variable cost per unit ($) 1.20 1.67 1,800,000 1,000,000 0.75 1.25 1,125,000 750,000 Total variable cost ($) Fixed costs ($) Net profit ($) 520,000 170,000 155,000 80,000 Ratios .63 .75 Variable cost to sales Variable income to sales .37 .25 Utilization of capacity (%) 75.0 30.0 Product Lines B 400,000 1.50 600,000 0.625 250,000 275,000 75,000 .42 .58 20.0 500,000 0.40 200,000 0.25 125,000 75,000 0 .63 .37 25.0