Macmullen Corporation produces and sells two products. Data concerning those products for the most recent month appear below: The fixed expenses of the entire company were $30,970. If the sales mix were to shift toward Product D08Q with total dollar sales remaining constant, the overall break-even point for the entire company:
A)would increase.
B)would decrease.
C)would not change.
D)could increase or decrease.

Question

Macmullen Corporation produces and sells two products. Data concerning those products for the most recent month appear below:  The fixed expenses of the entire company were $30,970. If the sales mix were to shift toward Product D08Q with total dollar sales remaining constant, the overall break-even point for the entire company:
A)would increase. 
B)would decrease. 
C)would not change. 
D)could increase or decrease.

Quizplus · Accepted Answer

If the sales mix shifts towards Product D08Q, which has a higher contribution margin per unit than Product R15X, the overall break-even point for the company would decrease. This is because the higher contribution margin per unit means that fewer units need to be sold to cover the fixed expenses of the company, thereby reducing the break-even point.

Macmullen Corporation Produces and Sells Two Products