Response to the following problem:
Data related to the expected sales of kayaks and canoes for River Sports Inc. for the current year, which is typical of recent years, are as follows:
Products
|
Unit Selling Price
|
Unit Variable Cost |
Sales Mix |
|
Kayaks
|
$400
|
$240
|
80%
|
|
Canoes
|
800
|
480
|
20%
|
The estimated fixed costs for the current year are $1,440,000.
Instructions
1. Determine the estimated units of sales of the overall product necessary to reach the break-even point for the current year.
2. Based on the break-even sales (units) in part (1), determine the unit sales of kayaks and canoes for the current year.
3. Assume that the sales mix was 20% kayaks and 80% canoes. Determine the estimated units of sales of overall product necessary to reach the break-even point for the current year.
4. Based upon the break-even sales (units) in part (3), determine the unit sales of kayaks and canoes for the current year.
5. Why is the overall enterprise break-even point so different in (1) and (3)?