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Hair dryers sell at $70 and make up 60% of unit sales, while curling irons sell at $50 and make up 40%. What is the weighted average selling price per unit?
A$58 per unit
B$62 per unit
C$60 per unit
D$36 per unit
Answer & Solution
Correct answer: B. $62 per unit
1. A breakeven equation takes only one selling price, so two products must be blended by their sales mix.
2. Hair dryers contribute $70 times 60%, which is $42.
3. Curling irons contribute $50 times 40%, which is $20.
4. The weighted average selling price is $42 plus $20, which is $62.
5. $60 is the plain average of $70 and $50, which wrongly gives both products equal weight.
6. $36 is the weighted average contribution margin, which is a later step in the same calculation.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 5.3.4 Breakeven Point with Sales Mix_
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