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Question - A company makes fancy model planes and tanks. Each sells for $50. The planes have a variable cost of $25, and the tanks have a variable cost of $20. The fixed costs for the entire company are $20,000.
Required -
a. If the same number of planes and tanks are sold (one plane is sold for every tank sold), how much total revenue do they need to break even? How many units of planes and tanks do they need to break even?
b. If the sales mix changes so that one plane is sold for every four tanks, how much total revenue do they need to break even? How many units of planes and tanks do they need to break even?
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