Assuming a Constant Mix of 3 Units of Little for Every

question 128

Multiple Choice

Assuming a constant mix of 3 units of Little for every 1 unit of Big.
$$\begin{array} { l r r r } & \underline { \text { Little } } & \underline { \text { Big } } & \text { Total } \\\text { Sales } & \$ 20 & \$ 30 & \\\text { VC } & 14 & 18 & \\\text { Total fixed costs } & & & \$ 48000\end{array}$$
The break-even point in units would be:

• A)4800 units of Little and 1600 units of Big.
• B)1600 units of Little and 4800 units of Big.
• C)1200 units of Little and 400 units of Big.
• D)400 units of Little and 1200 units of Big.

Understand the concept of segment margin and its role in assessing divisional performance.

Analyze the impact of discontinuing product lines on overall profitability.

Calculate net operating income incorporating common fixed expenses.

Distinguish between variable costing and absorption costing net operating incomes.

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