Chapter 3, Problem 6PA

Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and unit variable cost for the three products are as follows:

Their sales mix s reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $25,000 per year.

1. What are total variable costs for Morris with their current product mix?
2. Calculate the number of units of each product that will need to be sold in order for Morris to break even.
3. What is their break-even point in sales dollars?
4. Using an income statement format, prove that this is the break-even point.