Record 1-2-3 is a top-selling electronic spreadsheet product. Record is about to release version 5.0. It divides its customers into two groups: new customers and upgrade customers (those who previously purchased Record 1-2-3, 4.0 or earlier versions). Although the same physical product is provided to each customer group, sizable differences exist in selling prices and variable marketing costs: (Click the icon to view the price and cost information.) The fixed costs of Record 1-2-3 5.0 are $16,500,000. The planned sales mix in units is 60% new customers and 40% upgrade customers. Requirement 1. What is the Record 1-2-3 5.0 breakeven point in units, assuming that the planned 60% / 40% sales mix is attained? Requirements Contribution margin per bundle = Breakeven point in bundles Begin by determining the sales mix. For every bundle, 3 units are sold to new customers, and 2 units are sold to customer who bought upgrades. Determine the formula used to calculate the breakeven point when there is more than one product sold, then enter the amounts in the formula to calculate the breakeven point in bundles. Fixed costs 1. What is the Record 1-2-3 5.0 breakeven point in units, assuming that the planned 60% / 40% sales mix is attained? 2. If the sales mix is attained, what is the operating income when 180,000 total units are sold? 16,500,000 90,000 units for new customers and 60,000 The breakeven point is units for upgrade customers. Requirement 2. If the sales mix is attained, what is the operating income when 180,000 units are sold? 550 30,000 3. Show how the breakeven point in units changes with the following customer mixes: a. New 40% and upgrade 60% b. New 80% and upgrade 20% c. Comment on the results. - X New customers Upgrade customers Total Units sold Total revenue 108,000 21,060,000 $ Total variable costs $ 7,020,000 14,040,000 $ 72,000 8,280,000 $ 2,520,000 5,760,000 180,000 29,340,000 9,540,000 Print Done Contribution margin 19,800,000 Fixed costs 16,500,000 Data table 3,300,000 Operating income Requirement 3. Show how the breakeven point in units changes with the following customer mixes: a. New 40% and Upgrade 60% and b. New 80% and Upgrade 20%. a. Begin by determining the sales mix for scenario "a". New Customers Upgrade Customers For every bundle, 2 units are sold to new customers, and 3 units are sold to customers who bought upgrades. Calculate the breakeven point in bundles for scenario "a", then determine the breakeven point for new customers and upgrade customers. Selling price Variable costs Manufacturing Marketing $ 195 $ 115 $ 15 G 50 65 15 20 The breakeven point is for new customers and bundles. This translates to a breakeven point of units $ 130 35 $ 80 units for upgrade customers. Contribution margin - X