Problem
A firm is selling two products-chairs and bar stools-each at $55 per unit. Chairs have a variable cost of $30, and bar stools $20. Fixed cost for the firm is $22,000.
I. If the sales mix is 1:1 (one chair sold for every bar stool sold), what is the break-even point in dollars of sales? In units of chairs and bar stools?
II. If the sales mix changes to 1:4 (one chair sold for every four bar stools sold), what is the break-even point in dollars of sales? In units of chairs and bar stools?