Question

Now, let’s assume the company wants to consider producing both products. Assume that, considering forecasted sales and production factors, the company has decided on a product mix of 60% Ground Force 1s and 40% Fosters. What amount of sales (in dollars) must the company obtain to break even with that product mix? What's the answer to that question?

Answer 1

To calculate the break-even sales in dollars with a mixed product strategy, detailed information about selling prices, variable costs, and fixed costs is necessary. Without these specifics, it's impossible to compute a precise break-even point.

Step-by-step explanation:

In determining the break-even sales in dollars when a company wants to consider producing two products with a specific mix, we must calculate the combined contribution margin and then apply it to the fixed costs. Unfortunately, the question does not provide sufficient details such as the selling price, variable costs, and fixed costs for the Ground Force 1s and Fosters products needed to calculate the break-even point. Typically, the contribution margin is calculated for each product (selling price minus variable costs), and then a weighted average is computed based on the product mix. This figure is then used to divide the total fixed costs to find the break-even point in units, which can then be multiplied by the selling price to obtain the break-even sales in dollars.