Crystal Clear Products produces two types of water filters. One attaches to the faucet and cleans all water that passes through the faucet. The other is a pitcher-cumfilter that only purifies water meant for drinking. The unit that attaches to the faucet is sold for $90 and has variable costs of $25. The pitcher-cum-filter sells for $110 and has variable costs of $20. Crystal Clear sells two faucet models for every three pitchers sold. Fixed costs equal $1,200,000.Q1. What is the breakeven point in unit sales and dollars for each type of filter at the current sales mix?

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Asked Feb 13, 2020
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Crystal Clear Products produces two types of water filters. One attaches to the faucet and cleans all water that passes through the faucet. The other is a pitcher-cumfilter that only purifies water meant for drinking. The unit that attaches to the faucet is sold for $90 and has variable costs of $25. The pitcher-cum-filter sells for $110 and has variable costs of $20. Crystal Clear sells two faucet models for every three pitchers sold. Fixed costs equal $1,200,000.

Q1. What is the breakeven point in unit sales and dollars for each type of filter at the current sales mix?

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Expert Answer

Step 1

Compute Break-even units and break-even revenue for faucet model and pitcher model.

Let faucet model is denoted by F and pitcher model is denoted by P.

Formula to calculate number of units for break-even of F and P:

Number of units = Break-even units x Units per bundle

Step 2

Substitute 3,000 units for break-even units and 2 units per bundle for F and 3 units per bundle for P,

Number of units for F = 3,000 units x 2 units per bundle

= 6, 000 units

Number of units for P = 3,000 units x 3 units per bundle

= 9,000 units

Formula to calculate break-even revenue of F and P:

Break-even revenue = Number of units x Selling price per unit

Substit...

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