$[$LO $9-3,9-6]9-38$ Profit$-$Planning; Multiple Products Most businesses sell several products at varying prices.

The products often have different unit variable costs. Thus, the total profit and the breakeven point

depend on the proportions in which the products are sold. Sales mix is the relative contribution of

sales among various products sold by a firm. Assume that the sales of Jordan Inc. for a typical year

are as follows:

$356$ Part Two Planning and Decision Making

Assume the following unit selling prices and unit variable costs:

Fixed costs are $$400,000$ per year. Assume that the sales mix, expressed in terms of relative physical

units sold, is constant as sales volume changes.

Required

Determine the breakeven point in total units and, for this breakeven point, calculate the number of units

of A and $B$ that must be sold. Use the weighted$-$average contribution margin approach and round the

solution up to the next whole number.

Use the Goal Seek function in Excel to determine the overall breakeven point $($in units$)$ for the company.

Determine the overall breakeven point in terms of sales dollars based on the weighted$-$average contribu$-$

tion margin ratio $($CMR$).($Hint: The weights for calculating the weighted$-$average CMR are based on

relative sales dollars, not units, of the two products.$)$ Break down the total sales dollars breakeven point

into sales dollars for product A and sales dollars for product B$.$

Explain the following statement: "For the multiproduct firm, there is no breakeven point independent of

the sales$-$mix assumption."

Assume the original facts except that now fixed costs are expected to be $$40,000$ higher than originally

planned. How does this expected increase in fixed costs affect the breakeven point in units? How does

the percentage change in the breakeven point compare to the percentage increase in fixed costs? What

general conclusion might you draw on the basis of these calculations?