A company produces and sells two products. Data concerning those products for the most recent month appear below:
Product Q91I Product J53Z
sales $15,000 $11,000
Variable expenses $5,850 $5,070
Fixed expenses for the entire company were $13,980.
a. Determine the overall break-even for the company. Show your Work.
b. If the sales mix shifts toward Product Q91I with no change in total sales, what will happen to the break-even point for the company? Explain.
WN- calculation of entire PV ratio-
total sales = 15000+11000 = 26000
total variable expense = 5850+5070 = 10920
Profit = 26000-10920 = 15080
PV ratio = 15080/26000*100 = 58%
a. overall break even = fixed expense/PV ratio
=13980/58%
= 24103.45
b. total sales = 26000
variable expense ratio od product Q91I = 5850/15000*100 = 39%
PV ratio of productvQ91I = 61%
break even = 13980/61% = 22918.03
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