Froio Corporation produces and sells two products.Data concerning those products for the most recent month appear below: Fixed expenses for the entire company were $26, 570. If the sales mix were to shift toward Product M06M with total sales remaining constant, the overall break-even point for the entire company:

Question

Froio Corporation produces and sells two products.Data concerning those products for the most recent month appear below:  Fixed expenses for the entire company were $26, 570. If the sales mix were to shift toward Product M06M with total sales remaining constant, the overall break-even point for the entire company:

Quizplus · Accepted Answer

The break-even point is the level of sales at which revenue equals total costs (fixed and variable). If the sales mix shifts towards Product M06M, which has a higher contribution margin per unit than Product D15D, then the overall break-even point for the entire company would decrease. This is because the higher contribution margin per unit means that fewer units would need to be sold to cover the fixed expenses and break-even. Therefore, the best choice is D.

Froio Corporation Produces and Sells Two Products