boom company makes and sells wireless speakers. the price of the standard model is $360, and its variable…

boom company makes and sells wireless speakers. the price of the standard model is $360, and its variable expenses are $210. the price of the deluxe model is $500, and its variable expenses are $300. the price of the superior model is $1,600, and its variable expense per unit is $600. total fixed expenses are $300,000. generally, boom sells 8 standard models and 4 deluxe models for every superior model sold. what would happen to the break - even sales revenue if booms sales mix changed to 9 standard models, 4 deluxe models, and 1 superior model sold?\na break - even sales revenue would not change.\nb break - even sales revenue would decrease.\nc break - even sales revenue would increase.\nd the change in the break - even sales revenue cannot be predicted from the given information.\nquestion 23\nlast saved 8:01:10 pm\n3.5 points\nquestions filter (50)

boom company makes and sells wireless speakers. the price of the standard model is $360, and its variable expenses are $210. the price of the deluxe model is $500, and its variable expenses are $300. the price of the superior model is $1,600, and its variable expense per unit is $600. total fixed expenses are $300,000. generally, boom sells 8 standard models and 4 deluxe models for every superior model sold. what would happen to the break - even sales revenue if booms sales mix changed to 9 standard models, 4 deluxe models, and 1 superior model sold?\na break - even sales revenue would not change.\nb break - even sales revenue would decrease.\nc break - even sales revenue would increase.\nd the change in the break - even sales revenue cannot be predicted from the given information.\nquestion 23\nlast saved 8:01:10 pm\n3.5 points\nquestions filter (50)

Answer

Explanation:

Step1: Calculate contribution margin per unit for each model

Standard: $360 - 210=150$ Deluxe: $500 - 300 = 200$ Superior: $1600 - 600=1000$

Step2: Calculate original sales - mix proportion

Original mix: 8 standard, 4 deluxe, 1 superior. Total = $8 + 4+1 = 13$ Standard proportion: $\frac{8}{13}$ Deluxe proportion: $\frac{4}{13}$ Superior proportion: $\frac{1}{13}$

Step3: Calculate original weighted - average contribution margin (WACM)

$WACM_{original}=150\times\frac{8}{13}+200\times\frac{4}{13}+1000\times\frac{1}{13}=\frac{1200 + 800+1000}{13}=\frac{3000}{13}\approx230.77$

Step4: Calculate original break - even sales revenue

Break - even sales revenue = $\frac{Fixed\ expenses}{WACM}$ $Break - even_{original}=\frac{300000}{\frac{3000}{13}}=300000\times\frac{13}{3000}=1300000$

Step5: Calculate new sales - mix proportion

New mix: 9 standard, 4 deluxe, 1 superior. Total = $9 + 4+1 = 14$ Standard proportion: $\frac{9}{14}$ Deluxe proportion: $\frac{4}{14}$ Superior proportion: $\frac{1}{14}$

Step6: Calculate new weighted - average contribution margin (WACM)

$WACM_{new}=150\times\frac{9}{14}+200\times\frac{4}{14}+1000\times\frac{1}{14}=\frac{1350+800 + 1000}{14}=\frac{3150}{14}=225$

Step7: Calculate new break - even sales revenue

$Break - even_{new}=\frac{300000}{225}=\frac{300000\times4}{900}=\frac{1200000}{900}\approx1333333.33$

Since $1333333.33>1300000$, break - even sales revenue would increase.

Answer:

C. Break - even sales revenue would increase.