Ch.7: OQ 12 (p. 161) – SOPCh.7: OQ 12 (p. 161) – SOP
Chapter 7 page 161 OQ 12
A firm is selling two products, chairs and bar stools, each at $50 per unit. Chairs have a variable cost of $25, and bar stools $20. Fixed cost for the firm is $20,000.
a. 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?
b. If the sales mix changes to 1:4 (one chair sold for every four bar stools sold), what is the break-even point in dollar of sales? In units of chairs and bar stools?
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