Patriot Co. manufactures and sells three products: red, white, and blue. Their unit selling prices are red, $46; white, $76; and blue, $101. The per unit variable costs to manufacture and sell these products are red, $31; white, $51; and blue, $71. Their sales mix is reflected in a ratio of 2:2:1 (red:white:blue). Annual fixed costs shared by all three products are $141,000. One type of raw material has been used to manufacture all three products. The company has developed a new material of equal quality for less cost. The new material would reduce variable costs per unit as follows: red, by $6; white, by $16; and blue, by $10. However, the new material requires new equipment, which will increase annual fixed costs by $11,000.

Required:

2. Assume if the company uses the new material, determine its new break-even point in both sales units and sales dollars of each individual product. (Round composite units up to next whole number.)

2. Determine its break-even point in both sales units and sales dollars of each individual product.
Determine the selling price per composite unit.
	Ratio	Selling price per unit		Total per composite unit
Red	2
White	2
Blue	1
Determine the variable costs per composite unit.
	Ratio	Variable cost per unit		Total per composite unit
Red
White
Blue
Determine the break-even point in composite units.
Choose Numerator:	/	Choose Denominator:	=	Break Even Units
Sales per unit	/	Contribution margin per unit	=	Break even units
				0
Determine its break-even point in units and sales dollars of each individual product.
	Number per composite unit	Number of composite units to break even.		Units sales at the break-even point	Dollar sales at the break-even point
Red
White
Blue

1. Assume if the company continues to use the old material, determine its break-even point in both sales units and sales dollars of each individual product. (Round composite units up to next whole number.)

1. Determine its break-even point in both sales units and sales dollars of each individual product.
Determine the selling price per composite unit.
	Ratio	Selling price per unit		Total per composite unit
Red	2
White	2
Blue	1
Determine the variable costs per composite unit.
	Ratio	Variable cost per unit		Total per composite unit
Red
White
Blue
Determine the break-even point in composite unit.
Choose Numerator:	/	Choose Denominator:	=	Break Even Units
Total fixed costs	/	Contribution margin per unit	=	Break even units
				0
Determine its break-even point in units and sales dollars of each individual product.
	Number per composite unit	Number of composite units to break even.		Units sales at the break-even point	Dollar sales at the break-even point
Red
White
Blue