Sales mix, new and upgrade customers. Chartz 1-2-3 is a top-selling electronic

spreadsheet product. Chartz is about to release version 5.0. It divides its customers

into two groups: new customers and upgrade customers (those who previously

purchased Chartz 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

NewCustomers Upgradeustomers

Selling price $195 $115

Variable costs

Manufacturing $15 $15

Marketing 50 65 20 35

Contribution margin $130 $80

The fixed costs of Chartz 1-2-3 5.0 are $16,500,000. The planned sales mix in units

is 60% new customers and 40% upgrade customers.

1. What is the Chartz 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 170,000 total

units are sold?

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.