Question $2$ teammate

Puleva S$.$A$.$ of Madrid Spain, manufactures and sells $2$ products of luxury finished cutlery $$ Alvaro and Bazan. Current monthly sales and cost information is provided below for each case:

Alvaro Bazan

Selling price per unit $$400$ $$600$

Variable expenses per unit $240120$

Number of cases sold $20080$

Fixed expenses are $$66,000$ per month.

Required:

a$.$ Based on the current sales mix, compute the break$-$even point of the company, and determine the current margin of safety. Also, prepare a contribution income statement in terms of dollars and Contribution margin percentage for each product and the total company sales.

b$.$ The company has just introduced a new product, Cano, that the company plans to sell for $$800$ per case. The variable cost of production is expected to be $$600,$ and expectations are for sales of $40$ cases per month. The fixed expenses are not expected to increase. Compute the company$$s new break$-$even point as a whole and prepare a new contribution margin income statement for each product and the total company sales.

c$.$ Explain $($briefly$)$ to the CEO why the break$-$even point has changed, despite no change in fixed expenses for the company and the addition of new product which has increased total contribution margin.