T$6\mathrm{.}1$ Newback Company

The Newback Company manufactures and sells three products. All products are sold and

serviced by a single sales force; none has its own product manager or marketing staff. The

company's manufacturing facilities are also general purpose facilities, and all products

require operations in every department of the factory. The company has products, for which

you have the following data $($all $$ figures are averages per unit$)$:

None of the fixed costs are traceable to a specific product. They have been apportioned to

each product on the basis of annual sales units.

REQUIREMENT

Calculate the break$-$even volume for each product, in $$ gross sales, reflecting the fixed

costs the company plans to assign to that product.

Calculate the break$-$even volume for the company as a whole, in $$ gross sales, at the

present product mix. Why does this differ from the sum of the break$-$even volumes you

calculated in answer to $1?$

Prepare a forecast of the company's profit $($loss$)$ if the company's selling efforts produce

the following product sales instead of those shown in the earlier table, all other factors

remaining unchanged:

PRODUCT

A

B

C

UNIT SALES

$250,000$

$800,000$

$600,000$