Required: 1. Determine the estimated units of sales of the overall enterprise product, E, necessary to reach the break-even point for the current year. 2. Based on the break-even sales (units) in part (1), determine the unit sales of both the 12" pizza and 16" pizza for the current year. 3. Assume that the sales mix was 50% 12" pizza and 50% 16" pizza. Compute the break-even point of the overall enterprise product, E. Why is it so different?
Sales Mix and Break-Even Sales
Data related to the expected sales of two types of frozen pizzas for Norfolk Frozen Foods Inc. for the current year, which is typical of recent years, are as follows:
| Products | Unit Selling Price | Unit Variable Cost | Sales Mix | |||
| 12" Pizza | $ 12 | $ 3 | 30% | |||
| 16" Pizza | 15 | 4 | 70% |
The estimated fixed costs for the current year are $46,800.
Required:
1. Determine the estimated units of sales of the overall enterprise product, E, necessary to reach the break-even point for the current year.
2. Based on the break-even sales (units) in part (1), determine the unit sales of both the 12" pizza and 16" pizza for the current year.
3. Assume that the sales mix was 50% 12" pizza and 50% 16" pizza. Compute the break-even point of the overall enterprise product, E. Why is it so different?
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