Slaby Motors Sells Two Different Products

question 19

Essay

Slaby Motors sells two different products. Following are the monthly revenues and costs:

If fixed costs are equal to $40,000, determine the break-even point at the current sales mix and the break-even point if the sales mix changes to 50% for each product. (Assume that total sales revenue and variable cost rate stay the same.)

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Definitions:

Demand

The willingness and ability of consumers to purchase goods and services at various prices.

Price Elasticity

A measure of the sensitivity of demand or supply to changes in price, indicating how the quantity demanded or supplied responds to price changes.

Total Revenue

The entire amount of income generated by the sale of goods or services before any expenses are deducted.

Price Elasticity

A measure of how much the quantity demanded or supplied of a good responds to a change in its price.