Fortune Tools Produces and Sells Two Products Fixed Costs for the Entire Company Were $17,570

question 53

Essay

Fortune Tools produces and sells two products. Data concerning these products for the most recent month appear below:
$$\begin{array} { l r r } & \text { Product XYZ } & \text { Product VAR } \\\text { Sales } & \$ 14,000 & \$ 27,000 \\\text { Variable costs } & \$ 6,720 & \$ 12,550\end{array}$$
Fixed costs for the entire company were $17,570.
Required:
a. Determine the overall break-even point for the company.
b. If the sales mix shifts toward Product XYZ, with no change in total sales, what will happen to the break-even point for the company? Explain.

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Definitions:

Paid-in Capital

Funds received from investors during equity issuances, contributing to a company's equity beyond the initial stock value.

Cash Price

The amount of money that a buyer pays to purchase a good or service when paying in cash instead of using credit or financing.

Book Value

The net value of a company's assets minus its liabilities, often used to assess the company's underlying value.

Common Share

Equity securities that represent ownership in a corporation, providing voting rights and a share in the company's profits via dividends.