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

Would Decrease

Step-by-step 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