Jamal & Co. makes and sells two types of shoes, Plain and Fancy. Data concerning

ID: 2521218 • Letter: J

Question

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

Sixty percent of the unit sales are Plain, and annual fixed expenses are $62,400.

The weighted-average unit contribution margin is:

a.) $18.40.

b.) $6.20.

c.) $10.65.

d.) $10.40.

e.) an amount other than those above.

Assuming that the sales mix remains constant, the total number of units that Jamal must sell to break even is

a.) an amount other than those above.

b.) 3,647.

c.) 5,737.

d.) 3,432.

e.) 6,000.

Plain Fancy Unit selling price $21.00 $36.00 Variable cost per unit 12.00 23.50

Contribution margin=Sales-Variable expenses

Contribution margin for Plain=(21-12)=$9 per unit

Contribution margin for Fancy=(36-23.5)=$12.5per unit

Weight of Fancy=(100-60)=40%

1.Weighted Contribution margin=Respective Contribution margin*Respective weights

=(9*0.6)+(12.5*0.4)=10.40

2.Breakeven=Fixed cost/Contribution margin

=(62400/10.4)=6000

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