Reference no: EM132749780

Data ?1-2-3 is a? top-selling electronic spreadsheet product. is about to release version 5.0. It divides its customers into two? groups: new customers and upgrade customers? (those who previously purchased Data ?1-2-3, 4.0 or earlier? versions).

Although the same physical product is provided to each customer? group, sizable differences exist in selling prices and variable marketing? costs:

                               New Customers             Upgrade Customers
Selling price               $225                       $125

Variable costs

Manufacturing              $30                          $30
Marketing                    65       95              15         45
Contribution margin         $130                         $80

The fixed costs of Data ?1-2-3 5.0 are $16,500,000. The planned sales mix in units is 60?% new customers and 40?% upgrade customers.

Problem 1: What is the Data ?1-2-3 5.0 breakeven point in? units, assuming that the planned 60?% ?/ 40?% sales mix is? attained?

Problem 1: If the sales mix is? attained, what is the operating income when 240,000 total units are? sold?

Problem 1: Show how the breakeven point in units changes with the following customer? mixes:

a. New 40?% and upgrade 60?%
b. New 90?% and upgrade 10?%   
c. Comment on the results.