Flesch Corporation produces and sells two products. In the most recent month, Product C90B had sales of $27,520 and variable expenses of $6,880. Product Y45E had sales of $31,160 and variable expenses of $17,138. The fixed expenses of the entire company were $23,600. 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:

Question

Quizplus · Accepted Answer

The contribution margin per unit for C90B is ($27,520 - $6,880) = $20,640 and for Y45E is ($31,160 - $17,138) = $14,022. This means that C90B generates more contribution margin per unit. If the sales mix shifts towards C90B, the overall contribution margin per unit will increase, which in turn reduces the break-even point. Therefore, the break-even point for the entire company would decrease if the sales mix were to shift towards Product C90B.

Flesch Corporation Produces and Sells Two Products