Dietrick Corporation produces and sells two products. Data concerning those products for the most recent month appear below: Fixed expenses for the entire company were $42,550.If the sales mix were to shift toward Product B32L with total sales remaining constant, the overall break-even point for the entire company:
A) could increase or decrease.
B) would decrease.
C) would not change.
D) would increase.

Question

Dietrick Corporation produces and sells two products. Data concerning those products for the most recent month appear below:  Fixed expenses for the entire company were $42,550.If the sales mix were to shift toward Product B32L with total sales remaining constant, the overall break-even point for the entire company:
A) could increase or decrease. 
B) would decrease. 
C) would not change. 
D) would increase.

Quizplus · Accepted Answer

If the sales mix shifts towards Product B32L, which has a lower contribution margin than Product A55T, the company would need to sell more units to cover the fixed expenses. Thus, the break-even point would decrease if the sales mix shifts towards Product A55T, and increase if the sales mix shifts towards Product B32L, assuming total sales remain constant.

Dietrick Corporation Produces and Sells Two Products