Question

Flesch Corporation produces and sells two products. In the most recent month, Product C90B had sales of $35,640 and variable expenses of $8,910. Product Y45E had sales of $31,680 and variable expenses of $12,672. The fixed expenses of the entire company were $20,000. 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:

Would Decrease

Explanation:

The computation is shown below:

Particulars             C90B          Y45E          Total

Sales (A)                 $35,640      $31,680     $67,320

Variable Expenses (B) $8,910    $12,672     $21,582

Contribution ( C = A-B) $26,730  $19,008    $45,738

Contribution Margin Ratio

( D = C ÷  A)                  75%              60%         67.94%

The break even point would be decreased as for the product C90B the contribution margin ratio is increased as compared with the product Y45E