question 22\nboom company makes and sells wireless speakers. the price of the standard model is $360, and…

question 22\nboom 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.\n3.5 points

question 22\nboom 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.\n3.5 points

Answer

Explanation:

Step1: Recall break - even formula

Break - even sales revenue = Fixed expenses / Weighted - average contribution margin ratio.

Step2: Analyze contribution margin of each model

Standard model: Contribution margin per unit = $360 - 210= $150. Deluxe model: Contribution margin per unit = $500 - 300 = $200. Superior model: Contribution margin per unit = $1600 - 600=$1000.

Step3: Calculate initial weighted - average contribution margin ratio

Initial sales mix: 8 standard, 4 deluxe, 1 superior. Total units in mix = 8 + 4+1 = 13. Total contribution margin for initial mix: (8×150)+(4×200)+(1×1000)=1200 + 800+1000 = $3000. Initial weighted - average contribution margin per unit = 3000/13≈$230.77. Initial weighted - average contribution margin ratio (assuming we can find total selling price per mix and calculate ratio).

Step4: Calculate new weighted - average contribution margin ratio

New sales mix: 9 standard, 4 deluxe, 1 superior. Total units in mix = 9 + 4+1 = 14. Total contribution margin for new mix: (9×150)+(4×200)+(1×1000)=1350 + 800+1000 = $3150. New weighted - average contribution margin per unit = 3150/14 = $225. Since fixed expenses ($300000) remain the same and new weighted - average contribution margin per unit is lower than initial (225 < 230.77), using the break - even formula, break - even sales revenue = Fixed expenses / Weighted - average contribution margin ratio. As the denominator (weighted - average contribution margin ratio) decreases, the break - even sales revenue will increase.

Answer:

C. Break - even sales revenue would increase.