Question - Jack and Jill Company produces two products, X and Y. X sells for $10/unit and Y sells for $20/unit. The products have a variable cost of $9 for X and $14 for Y. Last year the company sold 10,000 units of X and 40,000 units of Y. Fixed costs are assumed to remain constant at $150,000 per year.
Required:
Assuming that the company maintains the same sales mix as last year:
1. Calculate the breakeven point in units.
2. Calculate the sales revenue required to earn a target operating income of $50,000.
3. Refer to the original data. Without doing any calculations, comment on the implications for break even and target income of a mix shift to 25,000 units of X and 25,000 units of Y. Explain your conclusion.