Answer (A) is correct . The sales revenue at which the same profit or loss will be made equals the unit price times the units sold for each kind of skis. Accordingly, if M is the number of units sold of mountaineering skis and T is the number of units sold of touring skis, this level of sales revenue may be stated as $88M or $80T, and M is therefore equal to ($80 ÷ $88)T. Moreover, given the same profit or loss, the difference between sales revenue and total costs (variable + fixed) will also be the same for the two kinds of skis. ? Solving the equation below by substituting for M yields sales revenue of $880,000 [(11,000 × $80) or (10,000 × $88)]. Sales M – VC M – FC M = Sales T – VC T – FC T $88M – $52.80M – $369,600 = $80T – $52.80T – $316,800 $35.2M – $52,800 = $27.2T $35.2($80 ÷ $88)T = $27.2T + $52,800 T = 11,000 units
Answer (B) is incorrect because The same profit or loss is earned at a sales revenue of $880,000. Answer (C) is incorrect because The same profit or loss is earned at a sales revenue of $880,000. Answer (D) is incorrect because The same profit or loss is earned at a sales revenue of $880,000.
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