Peak Company sells three different products that are similar, but are differentiated by various product features. Budgeted sales by product and in total for the coming year are shown below:
If the actual percentage of sales for the year were Standard, 50%; Deluxe, 40%; and Premium, 10%, than:

Question

Peak Company sells three different products that are similar, but are differentiated by various product features. Budgeted sales by product and in total for the coming year are shown below:
 If the actual percentage of sales for the year were Standard, 50%; Deluxe, 40%; and Premium, 10%, than:

Quizplus · Accepted Answer

Overall contribution margin (CM) ratio: Sum of original CM ratio, by products x respective actual sales percentages = (0.50 x 0.70) + (0.40 x 0.20) + (0.10 x 0.45) = 0.475.
Original CM ratio, per problem #73 = 0.52, therefore overall CM DECREASE
Revised break-even (BE) sales dollars: $117,000 / 0.475 = $246,315.79.
Original BE sales dollars, per Problem #73 = $225,000, therefore break even sales dollars INCREASE.

Peak Company Sells Three Different Products That Are Similar, but Are