Question
Patriot Co. manufactures and sells three products: red, white, and blue. Their unit selling prices are red, $49; white, $79; and blue, $104. The per
Patriot Co. manufactures and sells three products: red, white, and blue. Their unit selling prices are red, $49; white, $79; and blue, $104. The per unit variable costs to manufacture and sell these products are red, $34; white, $54; and blue, $74. Their sales mix is reflected in a ratio of 2:2:1 (red:white:blue). Annual fixed costs shared by all three products are $144,000. 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 $9; white, by $19; and blue, by $9. However, the new material requires new equipment, which will increase annual fixed costs by $14,000.
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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
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