If Mean Machine sold more X-treme scooters and fewer Mod sco…

(Multiproduct) Mean Machine makes three types of electric scooters. The company’s total fixed cost is $1,080,000,000. Selling prices, variable cost, and sales percent-ages for each type of scooter follow:

Percent of

Selling Price

Variable Cost

Total Unit Sales

Mod

$2,200

$1,900

30

Rad

3,700

3,000

50

X-treme

6,000

5,000

20

a. What is Mean Machine’s break-even point in units and sales dollars?

b. If the company has an after-tax income goal of $1 billion and the tax rate is 50 percent, how many units of each type of scooter must be sold for the goal to be reached at the current sales mix?

c. Assume the sales mix shifts to 50 percent Mod, 40 percent Rad, and 10 percent X-treme. How does this change affect your answer to part (a)?

d. If Mean Machine sold more X-treme scooters and fewer Mod scooters, how would your answers to parts (a) and (b) change? No calculations are needed.