Multiple-product profit analysis. Cisco's Sumptuous Burritos produces two burritos, chicken and steak, with the following characteristics:
|
|
Chicken
|
Steak
|
|
Selling Price per Unit
|
$4
|
$6
|
|
Variable Cost per Unit
|
$2
|
$3
|
|
Expected Sales (units)
|
200,000
|
300,000
|
The total fixed costs for the company are $200,000.
a. What is the anticipated level of profits for the expected sales volumes?
b. Assuming that the product mix would be 40 percent chicken and 60 percent steak at the break-even point, compute the break-even volume.
c. If the product sales mix were to change to four chicken burritos for each steak burrito, what would be the new break-even volume?