Maxie Pty Ltd Makes and Sells Two Types of Shoes,Plain

question 86

Multiple Choice

Maxie Pty Ltd makes and sells two types of shoes,Plain and Fancy.Product data is as follows:
Sixty per cent of the sales in units are Plain and annual fixed expenses are $45 000 and the sales mix remains constant.Assume an income tax rate of 20 per cent.The break-even point for this data is 5000 units in total.How will the calculation of the break-even point change (if at all) if the relative percentages of the products in the mix change from 60 per cent Plain shoes to 40 per cent Fancy shoes?

• A) The break-even point in total will not change.The only change will be the relative number of each of the units.
• B) Neither the break-even point in total nor the relative number of each of the units to produce at break-even will change.
• C) The break-even point will change because the calculation above assumes a constant mix,namely 60 per cent to 40 per cent.
• D) The break-even point will be higher.

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Definitions:

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