20) Cook’s Company sells two models of its product. The King sells for $140 and
ID: 2674863 • Letter: 2
Question
20) Cook’s Company sells two models of its product. The King sells for $140 and has variable costs of $100. The Queen sells for $80 and has variable costs of $60. Richter typically sells 3 Queen for every King sold. Fixed costs are $250,000. How many Queens will be sold at the break-even point?A) 10,000.
B) 7,500.
C) 6,500.
D) 2,500.
21) Assume that NBD firm’s bicycle has fixed costs of $101,250. Each unit generates variable costs of $80 and sells for $125.00. What is the break-even point?
A) 2,250 units
B) 221,250 units
C) 1,536 units
D) 8,025 units
Explanation / Answer
we have, TOtal COsts = 250,000 + 100x + 60y Total sales = 140x + 80y now at breakeven point : costs = sales 250,000 + 100x + 60y = 140x + 80y 250,000 = 40x + 20y y = 3x now 250000 = 40x + 20(3x) x = 2500 Number of Queens sold = y = 3x = 7500 Option - B 2. BD firm’s bicycle has fixed costs of $101,250. Each unit generates variable costs of $80 and sells for $125.00. at break even poijnt, costs = sales 101250 + 80x = 125x 45x = 101250 x = 2250 units option - A
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