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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
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 $13,500,000. The planned sales mix in units is 60% new customers and 40% upgrade customers. Read the requirements. Data Table Requirements New Customers Upgrade Customers 1. $ 225 120 2. Selling price Variable costs Manufacturing $ What is the Record 1-2-3 5.0 breakeven point in units, assuming that the planned 60% / 40% sales mix is attained? If the sales mix is attained, what is the operating income when 170,000 total units are sold? Show how the breakeven point in units changes with the following customer mixes: a. New 50% and upgrade 50% b. New 80% and upgrade 20% c. Comment on the results. 20 $ 20 3. 60 80 5 25 Marketing 145 $ 95 Contribution margin
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