Flesch Corporation produces and sells two products. In the most recent month, Product C90B had sales...
Flesch Corporation produces and sells two products. In the most recent month, Product C90B had sales of $24,700 and variable expenses of $6,175. Product Y45E had sales of $35,280 and variable expenses of $15,876. The fixed expenses of the entire company were $17,300. If the sales mix were to shift toward Product C90B with total dollar sales remaining constant, the overall break-even point for the entire company:
Multiple Choice
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would increase.
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would not change.
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could increase or decrease.
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would decrease.
Homework Answers
Contribution margin ratio = Contribution margin / Sales
Contribution margin ratio
C90B = (24,700-6,175)/24,700 = 75%
Y45E = (35,280-15,876)/35,280 = 55%
Higher the contribution margin ratio, lower the Breakeven point
So, if sales mix shifts to product C90B, overall Breakeven point Decreases
Option D
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