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Question - QayserQaisara Limited sells three sizes of umbrella: small, medium, and large. The company has annual fixed costs of $390 400. For the past several years, 20% of QayserQaisara's sales have been the small and large umbrellas with the remaining 60% being the medium size. QayserQaisara does not expect this to change in the next year.
The following information is also available for each of the umbrellas:
Small
Medium
Large
Sales price per unit
$8
$14
$35
Variable cost per unit
3
4
9
Required -
A. How many umbrellas in total does the company need to produce and sell in order to break even?
B. How many medium umbrellas need to be sold in order to break even?
C. If Hugo experiences a higher demand for large umbrellas than it anticipated will the break-even point increase, decrease, or stay the same? Why?
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