Question

Break-Even Point in Units for a Multiple-Product Firm Suppose that Chillmax Company now sells both pairs of shoes and fabric carryalls. The pairs of shoes are priced at $60 and have variable costs of $21 each. The carryalls are priced at $36 and have variable costs of $9 each. Total fixed cost for Chillmax as a whole equals $91,500 (includes all fixed factory overhead and fixed selling and administrative expense). Next year, Chillmax expects to sell 3,500 pairs of shoes and 875 carryalls. Required: 1. Form a package of shoes and carryalls based on the sales mix expected for the coming year. Package Unit Unit Contribution Margin Sales Mix Unit Contribution Margin - = x = Product Shoes Carryall $ Price 60 36 $ Variable Cost 21 9 $ x 39 27 x Package total

Answer 1

Chillmax company expects to sell 3500 pairs of shoes and 875 carryalls for the coming year.

Hence,

Ratio of product mix for the coming year of Pairs of shoes and Carryalls is 3500:875 i.e. 4:1

Following table shows the calculation of Contribution Margin and Package Total:

Product(a)	Price (b)	Unit Variable Cost(c)	Unit Contribution Margin(d=b-c)	Sales Mix(e)	Package Unit Contribution Margin(d*e)
Shoes	60	21	39	4	156
Carryall	36	9	27	1	27
Package Total					183