keyz?1-2-3 is a top-selling electronic spreadsheet product. keyz is about to release version 5.0. It divides its customers into two groups: new customers and upgrades customers (those who previously purchased keyz?1-2-3 4.0 or earlier versions). Although the same physical product is provided to each customer group, sizable differences exist in selling prices and variable marketing costs:

The fixed costs of keyz?1-2-3 5.0 are $16,500,000. The planned sales mix in units is 60% new customers and 40% upgrade customers.?

1.?What is the keyz?1-2-3 5.0 breakeven point in units, assuming that the planned 60%>40% sales mix is attained??

2.?If the sales mix is attained, what is the operating income when 170,000 total units are sold??

3.?Show how the breakeven point in units changes with the following customer mixes:?

a.?New 40% and upgrade 60%?

b.?New 80% and upgrade 20%?

c.?Comment on the results.

Transcribed Image Text:

Selling price Variable costs Manufacturing Marketing Contribution margin New Customers $195 $15 50 65 $130 Upgrade Customers $115 $15 20 35 $ 80 Selling price Variable costs Manufacturing Marketing Contribution margin New Customers $195 $15 50 65 $130 Upgrade Customers $115 $15 20 35 $ 80

Answer rating: 100% (QA)

1 The keyz 123 50 breakeven point in units is 133333 The total fixed costs for the product are 16500000 The contribution margin ratio is 65 This means that for every dollar of sales 65 cents is availa... View the full answer