Reference no: EM13340524

Multi-product CVP: 2 products

A company makes two products, X and Y.  At present the sales mix is 1 unit of X to 3 units of Y.  Fixed costs per period are $20 000. Selling prices and variable costs per unit for each product are:

X                Y

Unit selling price                      $18             $15

Unit variable cost                     $10             $11

 

Required:

(a)  How many units of each product must be sold in a period to make a profit of $15 000?

(b)  If in a period the sales mix changed to 2 units of X to 2 units of Y, and the total number of units sold in the period were 8000, how much profit would be earned in the period?

(c)  Assume that there is no specific sales mix.  Write the breakeven equation and graph it.  Name two breakeven points, and calculate a third breakeven point which is a linear combination of the two, using g = 0.25.  Prove that your third point is indeed a breakeven solution.