Question

Ahmed & Co. makes and sells two types of shoes, Plain and Fancy. Data concerning these products are as follows: Unit selling price Variable cost per unit Plain $ 25.00 15.00 Fancy $34.00 26.50 Sixty percent of the unit sales are plain, and annual fixed expenses are $45,000. Assuming that the sales mix remains constant, the number of units of Plain that Ahmed must sell to break even is: (Round intermediate calculations to 2 decimal places and final answer to nearest whole number) Multiple Choice о 5,625. О 3,000.

Answer 1

Sales mix = 60% : 40%

Weighted average contribution margin

= Plain (25-15)*60% + fancy (34-26.50)*40%

= 9 per unit

Total Breakeven point = 45,000/9 = 5,000 units

Units of plain at bep = 5,000 * 60%

= 3,000