Question

Arderi Air Conditioning sells one primary model of air conditioner. Each unit of this model costs them $61.25 to produce, but it sells for $142.50 apiece. Arderi Air Conditioning employs three salespeople, each of whom earns a different commission per unit sold, as shown on the following table. Salesperson Commission/Sale Mary $36.25 Jay $28.50 Abby $25.75 Last month, Arderi Air Conditioning had a total fixed overhead cost of $7,622.25. It is known that one salesperson sold 51 units, one salesperson sold 43 units, and one salesperson sold 54 units. Which arrangement of sales would cause Arderi Air Conditioning to break even? a. Mary sells 54 units; Jay sells 51 units; Abby sells 43 units b. Mary sells 54 units; Jay sells 43 units; Abby sells 51 units c. Mary sells 43 units; Jay sells 51 units; Abby sells 54 units d. Mary sells 43 units; Jay sells 54 units; Abby sells 51 units Please select the best answer from the choices provided

Answer 1

The arrangement of sales which would cause Arderi Air Conditioning to break even is Mary sells 54 units; Jay sells 51 units; Abby sells 43 units.

What is a break even point?

The break even point is the point at which the cost of production of an item to produce is equal to the revenue generated after selling it.

Arderi Air Conditioning sells one primary model of air conditioner. Each unit of this model costs them $61.25 to produce, but it sells for $142.50 apiece. Thus,

• Cost price C=$61.25
• Sells price S=$142.50

Arderi Air Conditioning employs three salespeople, each of whom earns a different commission per unit sold, as shown in the following table.

• Salesperson  Commission/Sale
•     Mary            $36.25
•     Jay               $28.50
•   Abby              $25.75

It is known that one salesperson sold 51 units, one salesperson sold 43 units, and one salesperson sold 54 units. Thus, the total AC sold is,

$n=51+43+54\\n=148$

Now, the selling price is $142.50. Thus, the revenue after selling 148 units is,

$R=148\times142.50\\R=21090$

The cost price is  $61.25. Thus, the cost of production of 148 units is,

$R=148\times61.25\\R=9065$

Last month, Arderi Air Conditioning had a total fixed overhead cost of $7,622.25. Suppose, Mary sells 43 units; Jay sells  units; Abby sells 54 units. Thus, the total cost,

$C_t=7622.25++9065+43\times36.25 +51\times28.50 +54\times25.75\\ C_t=21090$

The total cost is equal to the total revenue. This point is break even point.

Thus, the arrangement of sales which would cause Arderi Air Conditioning to break even is Mary sells 54 units; Jay sells 51 units; Abby sells 43 units.

Learn more about the break even point here;

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Answer 2

Answer:

c.

Mary sells 43 units; Jay sells 51 units; Abby sells 54 units