Reference: 08-13
Hooper Corporation produces and sells two models of vacuum cleaners, Standard and Deluxe. The company records show the following monthly data relating to these two products: $$\begin{array} { | l | l | l | l | }
\hline & \text { Standard } & & \text { Delwxe } \
\hline \text { Selling price per unit } & \$ 150 & & \$ 165 \
\hline \text { Variable production costs } & 120 & & 126 \
\hline \text { Variable selling expense per unit } & 16 & & 13 \
\hline \text { Expected monthly sales in units } & 600 && 1,200 \
\hline \text { Total monthly fixed cost } & & \$ 15,000 & \
\hline
\end{array}$$
-If the expected monthly sales in units were divided equally between the two models (900 Standard and 900 Deluxe), the break-even level of sales would be:

Question

Reference: 08-13
Hooper Corporation produces and sells two models of vacuum cleaners, Standard and Deluxe. The company records show the following monthly data relating to these two products: $$\begin{array} { | l | l | l | l | } 
\hline & \text { Standard } & & \text { Delwxe } \
\hline \text { Selling price per unit } & \$ 150 & & \$ 165 \
\hline \text { Variable production costs } & 120 & & 126 \
\hline \text { Variable selling expense per unit } & 16 & & 13 \
\hline \text { Expected monthly sales in units } & 600 && 1,200 \
\hline \text { Total monthly fixed cost } & & \$ 15,000 & \
\hline
\end{array}$$
-If the expected monthly sales in units were divided equally between the two models (900 Standard and 900 Deluxe), the break-even level of sales would be:

Quizplus · Accepted Answer

Changing the sales mix to an equal number of Standard and Deluxe models affects the overall contribution margin per unit because the Deluxe model has a higher contribution margin per unit than the Standard model. With the original sales mix favoring the Deluxe model, which has a higher contribution margin, the break-even point would be lower. Shifting to an equal sales mix increases the proportion of the lower-margin Standard model, thus raising the break-even level of sales.

Reference: 08-13 Hooper Corporation Produces and Sells Two Models of Vacuum

Reference: 08-13
Hooper Corporation Produces and Sells Two Models of Vacuum