Froio Corporation produces and sells two products. Data concerning those products for the most recent month appear below: Fixed expenses for the entire company were $26,570. If the sales mix were to shift toward Product M06M with total sales remaining constant, the overall break-even point for the entire company:
A)would increase.
B)could increase or decrease.
C)would not change.
D)would decrease.

Question

Froio Corporation produces and sells two products. Data concerning those products for the most recent month appear below:  Fixed expenses for the entire company were $26,570. If the sales mix were to shift toward Product M06M with total sales remaining constant, the overall break-even point for the entire company:
A)would increase. 
B)could increase or decrease. 
C)would not change. 
D)would decrease.

Quizplus · Accepted Answer

If the sales mix were to shift toward Product M06M, it means that the sales of Product M06M will increase relative to Product G12T. Since Product M06M has a higher contribution margin per unit than Product G12T, the overall break-even point for the entire company would decrease. Therefore, the correct answer is D.

Froio Corporation Produces and Sells Two Products