Music Masters produces and sells two CDs, Rap Runner, which has a contribution margin of $4, and Mo' Rap Now which has a contribution margin of $10. The planned sales mix is five CDs of Rap Runner for each CD of Mo' Rap Now. Fixed costs are $42,000.
a)What is the breakeven point in units for the two products?
b)Define sales mix generally and as it is used in this problem.
c)Explain why managers and accountants cannot know for certain what the sales mix will be.
d)The managers at Music Masters have worked with Mr. Iced Tee, Rap Runner's artist, for a number of years. A strong bond has developed between the artist and managers. However, the artist on Mo' Rap Now is difficult to work with. Although sales for the last several CDs featuring Mr. Iced Tee have been disappointing, the managers are confident that this new CD will sell well. Assume that the managers are biased. How might their bias affect business decisions and profitability at Music Masters?

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The Answer of Music Masters produces and sells two CDs, Rap Runner, which has a contribution margin of $4, and Mo' Rap Now which has a contribution margin of $10. The planned sales mix is five CDs of Rap Runner for each CD of Mo' Rap Now. Fixed costs are $42,000.
a)What is the breakeven point in units for the two products?
b)Define sales mix generally and as it is used in this problem.
c)Explain why managers and accountants cannot know for certain what the sales mix will be.
d)The managers at Music Masters have worked with Mr. Iced Tee, Rap Runner's artist, for a number of years. A strong bond has developed between the artist and managers. However, the artist on Mo' Rap Now is difficult to work with. Although sales for the last several CDs featuring Mr. Iced Tee have been disappointing, the managers are confident that this new CD will sell well. Assume that the managers are biased. How might their bias affect business decisions and profitability at Music Masters?

Music Masters Produces and Sells Two CDs, Rap Runner, Which