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Calculate the breakeven point in units

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Reference no: EM131585276

Question - The following data is available for a firm selling its computer hardware to two different categories of customers. The price/cost structure varies according to the customer as follows:

 

Estimated mix

Selling price

Variable costs

Manufacturing

Marketing

Contribution margin

New Customers

60% of total

$210

 

$25

65 90

$120

Upgrade Customers

40% of total

$120

 

$25

15 40

$80

The relevant fixed costs for a period are $14,000,000.

(a) Calculate the breakeven point in units.

(b) If the estimated sales mix is achieved, what is the operating profit when 200,000 units are sold?

(c) Show how the breakeven point in units changes with the following customer mixes:  (i) new 50%, upgrade 50% (ii) new 90%; upgrade 10%; (iii) comment on these results.

Reference no: EM131585276

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