The Janowski Company has three product lines of beer mugsA, B, and Cwith contribution margins of $6, $5, and $3, respectively. The president foresees sales of 204,000 units in the coming period, consisting of 34,000 units of A, 102,000 units of B, and 68,000 units of C. The company's fixed costs for the period are $540,000. 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 units of Product C are sold. Determine the formula used to calculate the breakeven point of the bundle when there is more than one product sold. Then, enter the amounts in the formula to calculate the breakeven point in bundles. - Breakeven point in bundles - The breakeven point is units of Product A, units of Product B, and units of Product C. Requirement 2. If the sales mix is maintained, what is the total contribution margin when 204,000 units are sold? What is the operating income? Product A Product B Product C Total Units sold Contribution margin Fixed costs Operating income Requirement 3. What would operating income be if the company sold 34,000 units of A, 68,000 units of B, and 102,000 units of C? What is the new breakeven point in units if these relationships persist in the next period? Begin by calculating the operating income. Product A Product B Product C Total Units sold Contribution margin Fixed costs Operating income What is the new breakeven point in units if these relationships persist in the next period? The breakeven point of the bundle is bundles. The breakeven point is units of Product A, units of Product B, and units of Product C. Requirement 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. (Select the correct choice with the best explanation.) O A. Yes, it is always better to choose the sales mix with the lowest breakeven point because the lowest breakeven point will always result in a higher contribution margin. B. Yes, it is always better to choose the sales mix with the lowest breakeven point because the lowest breakeven point will always result in a higher operating income. O C. No, it is not always better to choose the sales mix with the lowest breakeven point because this calculation ignores the demand for the various products. The company should look to and sell as much of each of the 3 products as it can to maximize operating income even if this means that this sales mix results in a higher breakeven point. Requirement 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. (Select the correct choice with the best explanation.) O A. Yes, it is always better to choose the sales mix with the lowest breakeven point because the lowest breakeven point will always result in a higher contribution margin. B. Yes, it is always better to choose the sales mix with the lowest breakeven point because the lowest breakeven point will always result in a higher operating income. O C. No, it is not always better to choose the sales mix with the lowest breakeven point because this calculation ignores the demand for the various products. The company should look to and sell as much of each of the 3 products as it can to maximize operating income even if this means that this sales mix results in a higher breakeven point. OD. No, it is not always better to choose the sales mix with the lowest breakeven point because this calculation ignores the fixed costs. The company should consider the fixed costs in order to maximize operating income
