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

question 15

Multiple Choice

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:

• A)higher than with the expected sales mix.
• B)lower than with the expected sales mix.
• C)the same as with the expected sales mix.
• D)cannot be determined with the available data.

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or used up within one year or within the business's operating cycle, whichever is longer.

Revenue Accounts

Accounts in the general ledger that record the income generated from the sale of goods or services.

Dividends

Distribution of profits by a corporation to its shareholders, typically in the form of payments.

Retained Earnings

The portion of net income left over for the business after it has paid out dividends to its shareholders, often reinvested in the company.