Financial and Managerial Accounting: P19-5A Boyeva Flower Pots, Inc

Financial and Managerial Accounting

PROBLEM 19-5A Sales mix and break-even sales
Data related to the expected sales of two types of decorative flower pots for Boyeva Flower Pots, Inc. for the current year, which is typical of recent years, are as follows:
Products Unit Selling Price Unit Variable Cost Sales Mix
Decorative Indoor Flower Pot $9.00 $3.60 25%
Rugged Outdoor Flower Pot $12.00 $5.40 75%

The estimated fixed costs for the current year are $328,860.

1. Determine the estimated units of sales of the overall product necessary to reach the break-even point for the current year.
2. Based on the break-even sales in units in part 1, determine the unit sales of both the Decorative Indoor Flower Pot and Rugged Outdoor Pot for the current year.
3. Assume that the sales mix was 50% Decorative Indoor Flower Pot and 50% Rugged Outdoor Pot. Compare the break-even point with that in part 1. Why is the break-even point in part 3 so different from that in part 1?
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