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The Janobi Company has three product lines of beer mugs$$A$,$ B$,$ and C$$with contribution margins of $$6,$ $$4,$ and $$3,$ respectively. The president foresees sales of $203,000$ units in the coming period, consisting of $29,000$ units of A$,116,000$ un The company's fixed costs for the period are $$728,000.$

Read the requirements.

Requirement $2.$ If the sales mix is maintained, what is the total contribution margin when $203,000$ units are sold? What is the operating income?

Product A

Product B

Product C

Units sold

$174000$

Contribution margini

$812000$

$728000$

Fixed costs

Operating income

$84000$

Requirement $3.$ What would operating income be if the company sold $29,000$ units of A$,58,000$ units of B$,$ and $116,000$ units of C$?$ What is the new breakeven point in units if these relationships persist in the next period?

Begin by calculating the operating income.

Product A

Product B

Product C

$116000$

Total

Units sold

$174000$

$232000$

Contribution margin

$754000$

$728000$

Fixed costs

Operating income

What is the new breakeven point in units if these relationships persist in the next period?

The breakeven point of the bundle is

$28000$ bundles.

$26000$

The breakeven point is

$28000$ units of Product A$,$

units of Product B$,$ and

$112000$ units of Product C$.$

Requirement $4.$ Comparing the breakeven points in requirements $1$ and $3,$ is it always better for a company to choose the sales mix that yields the lower breakeven point? Explain. $($Select the correct choice with the best explanation

$$ A$.$ No$,$ it is not always better to choose the sales mix with the lowest breakeven point because this calculation ignores the demand for the various products. The company should look to and sell as much of each of the $3$ products even if this means that this sales mix results in a higher breakeven point.

$.$

Yes, it is always better to choose the sales mix with the lowest breakeven point because the lowest breakeven point will always result in a higher contribution margin.

$$ C$.$

Yes, it is always better to choose the sales mix with the lowest breakeven point because the lowest breakeven point will always result in a higher operating income.

$$ D$.$ No$,$ it is not always better to choose the sales mix with the lowest breakeven point because this calculation ignores the fixed costs. The company should consider the fixed costs in order to maximize operating income.

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