WenWen Company Makes and Sells Two Types of Peanut Butter

question 87

Multiple Choice

WenWen Company makes and sells two types of peanut butter, Smooth and Chunky. Data concerning these products are as follows: $\begin{array} { l c c } & \text { Smooth } & \text { Chunky } \\\text { Unit selling price } & \$ 40.00 & \$ 55.00 \\\text { Variable cost per unit } & 16.00 & 24.50\end{array}$ Forty percent of the unit sales are Chunky, and annual fixed expenses are $159,600. Assuming that the sales mix remains constant, the number of units of Smooth that the company must sell to break even is:

• A)1,757.
• B)3,140.
• C)3,432.
• D)3,600.
• E)3,990.

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Definitions:

Consumer Surplus

The divergence between what consumers are able and willing to shell out for a product or service and the actual cost they incur.

Marginal Benefit

The uplift in satisfaction or value derived from the consumption of an additional unit of a product or service.

Marginal Cost

An additional expense incurred from the production or acquisition of one more unit of a good or service.

Efficiency

The ability of a system or process to achieve a goal using the least amount of resources possible.