Flesch Corporation produces and sells two products. In the most recent month, Product C90B had sales of $36,000 and variable expenses of $10,800. Product Y45E had sales of $27,280 and variable expenses of $12,276. The fixed expenses of the entire company were $17,300. If the sales mix were to shift toward Product C90B with total dollar sales remaining constant, the overall break-even point for the entire company:

Flesch Corporation produces and sells two products, in case if there is any shift in the sales from product Y45E to C90B, then the break even will also decrease since the contribution margin for Product C90B is less than the Product Y45E.

Explanation:

Contribution Margin: Total Contribution ÷ Total Sales

                  =(36000 - 10800) ÷ 36000 = 0.7

                  = 70%

remaining = 100 - 70 = 30%

                 = (27280 - 12276) ÷ 27280

                 = 0.55 = 55%

remaining = 100 - 55 = 45%

Since the contribution margin of Product C90B < Product Y45E, the break even will decrease.

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation: