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Balbuena Corporation produces and sells two products
Balbuena Corporation produces and sells two products. Data concerning those products for the most recent month appear below:
Product K87W Product I57P
Sales Revenues $17,000 $19,000
Total Variable Costs $7,650 $9,270
The fixed expenses of the entire company were $15,630.
1) Compute the total breakeven point in dollars for the overall company.
Assume the sales mix were to shift toward Product K87W (i.e., $19,000 for Product K87W and $17,000 for Product I57P) with no other change. What is the breakeven point in dollars for Product K87W?
Expert Solution
Overall Contribution Margin Ratio = Total Contribution Margin / Total Sales
Overall Contribution Margin Ratio = 19,080 / 36,000
Overall Contribution Margin Ratio = 0.53
Break-even Point in Dollars for Overall Company = Fixed Costs / Overall Contribution Margin Ratio
Break-even Point in Dollars for Overall Company = 15,630 / 0.53
Break-even Point in Dollars for Overall Company = 29,490.57
b. The breakeven point decreases as Product B64P has high contribution margin compared to Product 100E.
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