Calculate the break-even point in units

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Question - ABC manufactures and sells car tyres. It has developed two new models, 'A' and 'Z'. The annual fixed cost is $180000. From a pre-launch market survey, it expects that sixty percent of the potential customers prefer 'A' while forty percent prefer ''Z'. The following information has been extracted:

 

A

Z

Selling Price per tyre

$150

$200

Variable Cost per tyre

$50

$75

Required -

1. Calculate the break-even point in units and in sales dollars (in total and per product) for ABC. Assume a constant sales mix.

2. How many tyres of each model need to be sold to earn a target net profit of $400,000? Assume a constant sales mix.

3. Identify any two factors that must be assumed to enable CVP analysis to be conducted.

Reference no: EM132998653

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