Firstly, we need to calculate the contribution margin for the products.
Contribution margin = Total CM / Revenue
Contribution margin for Product A = $204,624/$454230
= 0.4505
Contribution margin for Product B = $59,904 / $260,364
= 0.2147
We can get the product mix from the total revenue.
Total expected revenue = $454,230 + $260,364 = $714,594
Product A's share = $454,230/$714,594 = 0.6356 i.e., 63.56%
Product B's share = $260,364/$714,594 = 0.3644 i.e., 36.44%
Now coming to the major solution, in order to break-even, the company need to atleast recover its fixed cost.
In this case, the fixed cost to recover is $230,000.
Break-even point = $230,000 / ((0.4505x0.6356)+(0.2147x0.3644))
= $230,000 / 0.36457448
= 630,872.46 units
Therefore, the total sales of Product A and Product B combined should be 630,872.46 units out of which Product A should be atleast 400,982.54 and Product B should be 229,889.93 units.
X Company is starting a new merchandising business and provides the following budgets for its two...
X Company is starting a new merchandising business and provides the following budgets for its two products: Product Revenue Total CM A $474,594 $229,196 B 252,280 60,480 Next year's budgeted fixed costs are $230,000. X Company would like to at least break even in its first year of operation; what must total sales be in order for that to happen [round unit numbers to two decimal places]? Assume that the budgeted product mix will not change.
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X Company is starting a new merchandising business and provides
the following budgets for its two products: the answer is not
6000
X Company is starting a new merchandising business and provides the following budgets for its two products: Product Revenue $527,308 265,670 Total CM $217,706 59,520 Next year's budgeted fixed costs are $210,000. X Company would like to at least break even in its first year of operation; what must total sales be in order for that to happen...
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