The Austin Electric Company Has Three Product Lines of Surge

question 2

Essay

The Austin Electric Company has three product lines of surge protectors commonly used in PC-A, B, and C
-having contribution margin of $3, $2, and $1, respectively. The president foresees sales of 200,000 units in the
coming period, consisting of 20,000 units of A, 100,000 units of B, and 80,000 units of C. The company's fixed
costs for the period are $255,000.
(a) What is the company's breakeven point in units, assuming that the given sales mix is maintained?
(b) If the mix is maintained, what is the total contribution margin when 200,000 units are sold? What is
operating income?
(c) Determine the operating income if 20,000 units of A, 80,000 units of B, and 100,000 units of C were sold.
What is the new breakeven point in units if these relationships persist in the next period?

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Definitions:

Calcium Salts

Inorganic compounds found in bones and teeth, critical for maintaining their hardness and strength.

Bone Tissue

A hard, dense connective tissue forming the structure of the skeleton and providing support and protection for the body.

F-distribution

A continuous probability distribution that arises frequently as the null distribution of a test statistic, especially in ANOVA and regression analysis.

Critical Value

A critical value is a point on the test distribution that is compared to the test statistic to determine whether to reject the null hypothesis.