Problem #2 You examine the financial statements of a firm and find that for ever

Question

Problem #2
You examine the financial statements of a firm and find that for every unit of Product Y sold, the firm sells 1.5 units of product X. The sales price and variable cost per unit for Product X are $100 and $70, respectively; the sales price and variable cost per unit for Product Y are $80 and $60, respectively. Assuming a constant product mix and fixed costs of $260,000, how many of each product line must be sold to break even? What is total sales revenue(in dollars) at the break-even point? Show your work

Explanation / Answer

for every y you sell, you sell 1.5 x, so for every y you sell, you make 65 towards the fixed costs ( 80 - 60, 100 - 70, 50 - 35) 260,000 / 65 = 4000, so 4000 y and 6000 x is the break even check: 4000 x 20 = 80,000, 6000 x 30 = 180,000; 80,000 + 180,000 = 260,000 sales revenue at break even is (4000 x 80) + (6000 x 100) = 920,000

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