Ahmed & Co. makes and sells two types of shoes, Plain and Fancy. Data concerning these products are as follows:

Plain Fancy

Unit selling price $ 21.00 $ 32.00

Variable cost per unit 10.00 28.00

Sixty percent of the unit sales are Plain, and annual fixed expenses are $57,400. 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)

Question

Business

Selina

13 May, 10:13

Ahmed & Co. makes and sells two types of shoes, Plain and Fancy. Data concerning these products are as follows:

Plain Fancy

Unit selling price $ 21.00 $ 32.00

Variable cost per unit 10.00 28.00

Sixty percent of the unit sales are Plain, and annual fixed expenses are $57,400. 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)

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Emilee · Answer 1

7,000

Explanation:

Weighted-average unit contribution margin:

= [ (Unit selling price of plain - Variable cost per unit of plain) * percent of the unit sales are Plain] + [ (Unit selling price of Fancy - Variable cost per unit of Fancy) * percent of the unit sales are Fancy]

= [ ($21 - $10) * 60%] + ($32 - $28) * 40%

= ($11 * 60%) + ($4 * 40%)

= $6.6 + $1.6

= $8.2

Break even sales:

= Annual fixed expenses : Weighted-average unit contribution margin

= $57,400 : $8.2

= 7,000