Hooper Corporation Produces and Sells Two Models of Vacuum Cleaners

question 113

Multiple Choice

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:
$\begin{array} {| l | r | r | } \hline & \text { Standard } & \text { Deluxe } \\\hline \text { Selling price per unit } & \$ 150 & \$ 165 \\\hline \text { Variable production costs } & \$ 120 & \$ 126 \\\hline \begin{array} { l } \text { Variable selling expense per } \\\text { unit }\end{array} & \$ 16 & \$ 13 \\\hline \begin{array} { l } \text { Expected monthly sales in } \\\text { units }\end{array} & 600 & 1,200 \\\hline \begin{array} { l } \text { Total monthly fixed cost } \\\text { (common in both) }\end{array} & & \$ 15,000 \\\hline\end{array}$


-If the expected monthly sales in units were divided equally between the two models (900 Standard and 900 Deluxe) ,where would the break-even level of sales be as compared to the expected sales mix?

• A) The same as with the expected sales mix.
• B) Higher than with the expected sales mix.
• C) Lower than with the expected sales mix.
• D) Cannot be determined with the available data.

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