Multi$-$product CVP and decision making. $[$LO $3]$

$3-33$ Crystal Clear Products produces two types of water filters. One attaches to the faucet and

cleans all water that passes through the faucet. The other is a pitcher$/$filter that only purifies water

meant for drinking.

The unit that attaches to the faucet is sold for $$90$ and has variable costs of $$25.$

The pitcher$/$filter sells for $$110$ and has variable costs of $$20.$

Crystal Clear sells two faucet models for every three pitchers sold. Fixed costs equal

$$1,200,000.$

Required

What is the breakeven point in unit sales and dollars for each type of filter at the current

sales mix?

Crystal Clear is considering buying new production equipment. The new equipment will

increase fixed cost by $$208,000$ peryear and will decrease the variable cost of the faucet

and the pitcher units by $$5$ and $$10,$ respectively. Assuming the same sales mix, how many

of each type of filter does Crystal Clear need to sell to break even?

Assuming the same sales mix, at what total sales level would Crystal Clear be indifferent

between using the old equipment and buying the new production equipment? If total sales

are expected to be $24,000$ units, should Crystal Clear buy the new production equipment?