Exercise 19-21

Cost Behavior and Cost-Volume-Profit Analysis Warren / Reeve / Duchac Exercise 19-21 solution

Sales mix and break-even sales

New Wave Technology Inc. manufactures and sells two products, MP3 players and satellite radios. The fixed costs are $300,000, and the sales mix is 40% MP3 players and 60% satellite radios. The unit selling price and the unit variable cost for each product are as follows:

a. Compute the break-even sales in units for both products combined.

10,000 units

b. How many units of each product, MP3 players and satellite radios, would be sold at the break-even point?

MP3 players: 4,000 units
Satellite radios: 6,000 units