Hog town Manufacturing Company produces the following three products: Saws, Knives, Measuring Tapes
Saws Knives Measuring Tapes
Selling price per unit $ 40.00 $ 16.00 $ 50.00
Variable costs per unit 28.00 12.00 30.00
The company has $76,000 of fixed costs and, on average, its sales have the following ratio: 4 saws, 3 knives and 2 measuring tapes.
a. What is the number of units of each product that must be sold for Hog town to achieve its breakeven point:
Break-even point units Saws Knives Tapes
b. What would be the effect on the firm's breakeven point if the sales ratio changes to 2 saws, 3 knives and 4 measuring Tapes? Briefly explain your answer.