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

Answer 1

Contribution per unit = 142.50 − 61.25 − commission:
- Mary: 45.00
- Jay: 52.75
- Abby: 55.50

Compute total contribution for each arrangement; option (c):
- Mary 43: 45 × 43 = 1,935
- Jay 51: 52.75 × 51 = 2,690.25
- Abby 54: 55.5 × 54 = 2,997
Total = 1,935 + 2,690.25 + 2,997 = 7,622.25 = fixed overhead

So (c) is the break-even arrangement.