Reference no: EM13547851

Sales mix, new and upgrade customers. Zapo 1-2-3 is a top-selling electronic spreadsheet product. Zapo is about to release version 5.0. It divides its customers into two groups: new customers and upgrade customers (those who previously purchased Zapo 1-2-3, 4.0 or earlier versions). Although the same physical product is provided to each customer group, sizable differences exist in selling prices and variable marketing costs:


The fixed costs of Zapo 1-2-3 5.0 are $14,000,000. The planned sales mix in units is 60% new customers and 40% upgrade customers.

1. What is the Zapo 1-2-3 5.0 breakeven point in units, assuming that the planned 60%/40% sales mix is attained?

2. If the sales mix is attained, what is the operating income when 200,000 units are sold?

3. Show how the breakeven point in units changes with the following customer mixes:
a. New 50%/Upgrade 50%
b. New 90%/Upgrade 10%
c. Comment on theresults.