Milano Co. manufactures and sells three products: product 1, product 2, and product 3. Their unit selling prices are product 1, $40; product 2, $30; and product 3, $20. The per unit variable costs to manufacture and sell these products are product 1, $30; product 2, $15; and product 3, $8. Their sales mix is reflected in a ratio of 6:4:2. Annual fixed costs shared by all three products are $270,000. One type of raw material has been used to manufacture products 1 and 2. The company has developed a new material of equal quality for less cost. The new material would reduce variable costs per unit as follows: product 1 by $10 and product 2 by $5. However, the new material requires new equipment, which will increase annual fixed costs by $50,000.
If the company continues to use the old material, determine its break-even point in both sales units and sales dollars of each individual product.
If the company uses the new material, determine its new break-even point in both sales units and sales dollars of each individual product. (Round to the next whole unit.)
What insight does this analysis offer management for long-term planning?
Please explain your work in detail and provide in-text citations. At least six (6) peer-reviewed references are required among which one should be the textbook as source of the data. Include the initial situation and initial assumptions in your answer.
1. Paper needs to be formatted in APA 7th edition
2. Please use Excel for the calculations, and copy the calculation to the word document as the part of the paper.
3. Include the initial situation and the initial assumption in your answer.
4. Need to explain your work in detail and provide in-text citations.
5. Need to have at least 6 peer-reviewed articles as the references (Recommend to find the articles from proquest.)
6. Need to include textbook as the references.
7. Please find the textbook and class PPTs in the attachment.
8. Paper needs to be at least 6 pages including the calculations. (excluding cover page & reference page)
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