How does shifting the sales mix at Ford Motor Company to more F-150 trucks affect Ford’s break even sales volume?

Ford Motor Company (FORD) sales jumped 31.5 % during June 2022 in the United States as compared to the prior month. Sales of Ford’s F-series trucks and the Explorer, Expedition, and Navigator SUV models drove the sales growth. According to a Bloomberg article (link) earlier this year, the F-150 Series product line is Ford’s most profitable product line.

Ford has three categories of vehicles, Trucks, SUVs, and Cars. According to Ford’s 2021 Form 10-K, below are the combined US unit sales of its vehicles in 2021 (both retail and wholesale). In addition, hypothetical average sales prices and average variable cost per unit are given.

To download the above table in Excel format for accessibility, click on this link.

View a quick tutorial video about the sales mix at multiproduct firms at this link and then answer the following questions.

Questions

1. Assume that Ford’s sales revenue is the same as last year’s sales revenue, yet its profits increase. How might this be possible?
2. Assume that consumer demand for cars is continually to decrease significantly. What strategy might Ford use to deal with this trend so that its net income does not also decrease?
3. According to the unit sales and hypothetical sales and cost data given in the article, what would Ford’s weighted-average contribution margin be?

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