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 upgrades 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. What is the Data 1-2-3 5.0 breakeven point in units, assuming that the planned 60% / 40% sales mix is attained? If the sales mix is attained, what is the operating income when 240,000 total units are sold? 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. Requirement 1. What is the Data 1-2-3 5.0 breakeven point in units, assuming that the planned 60% / 40% sales mix is attained? Begin by determining the sales mix. For every bundle, ▼ units are sold to new customers, and ▼ units are sold to customers who bought upgrades.
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 upgrades 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.
- What is the Data 1-2-3 5.0 breakeven point in units, assuming that the planned 60% / 40% sales mix is attained?
- If the sales mix is attained, what is the operating income when 240,000 total units are sold?
- 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.
Requirement 1. What is the Data 1-2-3 5.0 breakeven point in units, assuming that the planned 60% / 40% sales mix is attained?
Begin by determining the sales mix. For every bundle, ▼ units are sold to new customers, and ▼ units are sold to customers who bought upgrades.
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