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Duxeva Produces Two Products Named BigBlast and LittleBlast The Production Lines for Both Products Are Highly Automated, So

question 14

Multiple Choice

Duxeva produces two products named BigBlast and LittleBlast. Last month 2,000 units of BigBlast and 4,000 units of the LittleBlast were produced and sold. Following are average prices and costs for last month: $\begin{array}{lcc}&\underline{\text { BigBlast }}&\underline{\text { LittleBlast }}\\\text { Selling price } & \$ 100 & \$ 200 \\\text { Direct materials } & (25) & (75) \\\text { Direct labor } & (15) & (35) \\\text { Variable overhead } & (5) & (30) \\\text { Product line fixed costs } & (10) & (40) \\\text { Corporate fixed costs } &\underline{ (25) }&\underline{ (25) }\\\quad \text { Average margin per unit } &\underline{\underline{ \$ 20 }}& \underline{\underline{\$(5) }}\end{array}$
The production lines for both products are highly automated, so large changes in production cause very little change in total direct labour costs. Workers who are classified as direct labour monitor the production line and are permanent employees who regularly work 40 hours per week. All costs other than "corporate fixed costs" listed under each product line could be avoided if the product line were dropped. What is the breakeven sales volume (in units) for BigBlast? (In other words, what is the sales volume at which Duxeva should be financially indifferent between dropping and keeping BigBlast?)

Definitions:

Existential Angst

A deep-seated condition of human existence characterized by feelings of disorientation, confusion, or dread in the face of an apparently meaningless or absurd world.

Meaningless Existence

A perception or state in which life appears to lack purpose or inherent value.

Nervousness

A state of restlessness and agitation often accompanied by physical symptoms, typically due to anxiety or tension.

Existentialists

Philosophers who explore and discuss issues related to existence, freedom, and the meaning of life.