Calculate the break-even point in units

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Reference no: EM133010593

Question - XYZ sells three products: Red, Blue and Yellow. The company has annual fixed costs of $ 280,000.

Last year, the company sold the three products: Red, Blue and Yellow in the ratio of 5:3:2. The accounting department has compiled the following data related to the three products:

 

Red

Blue

Yellow

Price per product

$15

$25

$13

Variable cost per product

$8

$12

$7

Required -

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

2. How many units of each product needs to be sold to earn a target net profit of $100,000? Assume a constant sales mix.  

3. List any two assumptions that managers must make in CVP calculations and how are they critical to decision making.

Reference no: EM133010593

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