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The Janowski Company has three product lines of beer mugs-A, B, and C-with contribution margins of $5, $4, and $2, respectively. The president foresees
The Janowski Company has three product lines of beer mugs-A, B, and C-with contribution margins of $5, $4, and $2, respectively. The president foresees sales of 182,000 units in the coming period, consisting of 26,000 units of A, 104,000 units of B, and 52,000 units of C. The company's fixed costs for the period are $525,000. Read the requirements. Requirement 1. What is the company's breakeven point in units, assuming that the given sales mix is maintained? Begin by determining the sales mix. For every 1 unit of Product A, units of Product B, and Requirements units of Product C are sold. 1. What is the company's breakeven point in units, assuming that the given sales mix is maintained? 2. If the sales mix is maintained, what is the total contribution margin when 182,000 units are sold? What is the operating income? 3. What would operating income be if the company sold 26,000 units of A, 52,000 units of B, and 104,000 units of C? What is the new breakeven point in units if these relationships persist in the next period? 4. Comparing the breakeven points in requirements 1 and 3, is it always better for a company to choose the sales mix that yields the lower breakeven point? Explain.
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