Question

K-Too Everwear Corporation manufactures two styles of mountain climbing shoes for women: Regular and fashion styles. A pair of regular style shoes sells for $135, while the fashion style shoes sell for $160 per pair. The variable cost per pair for regular shoes is $38.94, and that for fashion style shoes is $41.5. K-Too Everwear has fixed costs of $1,800,000. K-Too Everwear has the sales mix of 60% and 40% for regular- and fashion-style shoes, respectively. What is K-Too Everwear's break-even sales in dollars? Please round to your calculations to 4 decimal places and choose the closest answer. A. $2,302,762 OB. $2,962,335 C. $2,599,041 D. $2,488,995

Answer 1

Following information are given Selling price Regular shoes - 135 Fashion style - 160 variable cost Regular shoes - 38.94 Fashion style .41.5 Total Fixed last - 180000 Sales Mix = Regular shues-Goy. Fashion Style - 40% Step- Total Fixed Expenses Boreale Even point : weighted Average Selling price- weighted Average variable expenses - weighted Average selling price = (sales price of Regular shues x Sales percentage of Regular shuest sale price of fashion style x sale percentage of Fashion style shues)

weighted Average variable cost a =&A Vaviable cost of Regular shoes y sales percentage of Regular shoes + varlalde cost of fashion style & sale percentage of fashion) style weighted Average selling price = (135 X 60%.+ 160 X 404) = 81+ 64 - 145 weighted Average variable cost =(38.94 X 60%* 41.58 40%) - 23.364 + 16.6 = 39.964 Brreale even point 180000 - (145-39.964) 190000 - 105.036 - 1713.6981 sell 1713.6981 the company will have to cenity to brease even.

Stepa - compute the no of units of each produs to be sold. Regular shoes = 1713.6980 X 60%= 1028.2009! Fashion style shoes = 1713.6981 X 40%= 685.4792 Step 3 - Break even point in Dollar Regular shoes-1028.2189 x 135 =138809.5515 109676.672 Fashion style shoes -685.47924 160 = Total = 109676.672 +138809. SS15 -248486.2235
Answer for the above question is option D-2488995.