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Multiple-Product Break-even, Break-Even Sales Revenue Cherry Blossom Products Inc. produces and sells yoga-training products: how-to DVDs and a...

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Accounting

Multiple-Product Break-even, Break-Even SalesRevenue

Cherry Blossom Products Inc. produces and sells yoga-trainingproducts: how-to DVDs and a basic equipment set (blocks, strap, andsmall pillows). Last year, Cherry Blossom Products sold 13,500 DVDsand 4,500 equipment sets. Information on the two products is asfollows:

DVDsEquipment Sets
Price$8$25
Variable cost per unit415

Total fixed cost is $94,500.

Suppose that in the coming year, the company plans to produce anextra-thick yoga mat for sale to health clubs. The companyestimates that 9,000 mats can be sold at a price of $17 and avariable cost per unit of $10. Total fixed cost must be increasedby $31,500 (making total fixed cost $126,000). Assume thatanticipated sales of the other products, as well as their pricesand variable costs, remain the same.

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