The following annual information is for Bressler Corporation: Total fixed costs: $100,000
-If the sales mix shifts to one unit of Product X and two units of Product Y,then the break-even point in units for a year will:
A)increase.
B)stay the same.
C)decrease.
D)be undeterminable.

Question

The following annual information is for Bressler Corporation:  Total fixed costs:  $100,000
-If the sales mix shifts to one unit of Product X and two units of Product Y,then the break-even point in units for a year will:
A)increase. 
B)stay the same. 
C)decrease. 
D)be undeterminable.

Quizplus · Accepted Answer

The break-even point is the level of sales at which the company's total revenue equals its total costs, resulting in zero profit. The break-even point in units is calculated by dividing the total fixed costs by the contribution margin per unit.

If the sales mix shifts to one unit of Product X and two units of Product Y, the contribution margin per unit will change. Assuming that Product X has a higher contribution margin than Product Y, the overall contribution margin per unit will increase. This means that the company will need to sell fewer units to cover its fixed costs and reach the break-even point.

Therefore, the break-even point in units for a year will decrease if the sales mix shifts to one unit of Product X and two units of Product Y.

The Following Annual Information Is for Bressler Corporation: Total