Question

Flesch Corporation produces and sells two products. In the most recent month, Product C90B had sales of $37,000 and variable expenses of $9,250. Product Y45E had sales of $29,700 and variable expenses of $16,335. The fixed expenses of the entire company were $22,000. If the sales mix were to shift toward Product C90B with total dollar sales remaining constant, the overall break-even point for the entire company:

Answer 1

Answer:

The BEP will decrease, which is good.

The reason is that C90B has a better profit margin than Y45E so if the sales shift toward C90B the Contribution mix margin ratio will be higher and it will be easy to pay fixed cost and make a gain

Explanation:

C90B

sales  37,000

variable expenses 9,250

contribution margin 27,750

CM 0.75

Y45E

sales 29,700

variable expenses 16,335

contribution 13,365

CM 0.45