Karen's Klothes sells blouses for women and girls. The average selling price and variable cost for each product are as follows:

Women: Selling Price $18.00 Girls: Selling Price $15.00
Women: Variable Cost $12.75 Girls: Variable Cost $10.50
Fixed costs are $30,000 and cannot be separated evenly between the two products.

Required:
a. What is the break-even point in units for each type of blouse assuming the sales mix is 2:1 in favour of women's blouses? Total sales cannot exceed 7,000 units due to space constraints.
b. What is the operating income assuming the sales mix is 2:1 in favour of women's blouses, and sales total 9,900 blouses?

Question

Karen's Klothes sells blouses for women and girls. The average selling price and variable cost for each product are as follows:

Women: Selling Price $18.00 Girls: Selling Price $15.00
Women: Variable Cost $12.75 Girls: Variable Cost $10.50
Fixed costs are $30,000 and cannot be separated evenly between the two products.

Required:
a. What is the break-even point in units for each type of blouse assuming the sales mix is 2:1 in favour of women's blouses? Total sales cannot exceed 7,000 units due to space constraints.
b. What is the operating income assuming the sales mix is 2:1 in favour of women's blouses, and sales total 9,900 blouses?

Quizplus · Accepted Answer

The Answer of Karen's Klothes sells blouses for women and girls. The average selling price and variable cost for each product are as follows:

Women: Selling Price $18.00 Girls: Selling Price $15.00
Women: Variable Cost $12.75 Girls: Variable Cost $10.50
Fixed costs are $30,000 and cannot be separated evenly between the two products.

Required:
a. What is the break-even point in units for each type of blouse assuming the sales mix is 2:1 in favour of women's blouses? Total sales cannot exceed 7,000 units due to space constraints.
b. What is the operating income assuming the sales mix is 2:1 in favour of women's blouses, and sales total 9,900 blouses?

Karen's Klothes Sells Blouses for Women and Girls