Speedy's Scooters plans to sell a standard scooter for $55 and a chrome scooter for $70. Speedy's purchases the standard scooter for $30 and the chrome scooter for $40. Speedy expects to sale one standard scooterfor every three chrome scooters. Speedy's monthly fixed costs are $23000. How many of each type of scooter must speedy's scooters sell each month to break even?

200 standard scooters  and 600 standard scooters

Explanation:

The computation of the each type of scooter to break even is shown below:

As we know that

Contribution margin per unit = Selling price per unit - variable cost per unit

So for standard scooter, it is

= $55 - $30

= $25

And, for chrome scooter, it is

= $70 - $40

= $30

Plus, it is given that the ratio between standard scooter and chrome scooter = 1 : 3

Now the weighted average contribution margin per unit is

= $25 × 1  ÷ 4 + $30 × 3 ÷ 4

= $6.25 + $22.50

= $28.75

So,

Break even units = Fixed costs ÷ weighted average contribution margin per unit

= $23,000 ÷ $28.75

= 800 units  

So for standard scooter, it is

= 800 × 1 ÷ 4

= 200 standard scooters  

And for chrome scooter, it is

= 800 × 3 ÷ 4

= 600 chrome scooters

since the options are not listed, when you are working on your budget you should also add water, tv, internet, miscellaneous and your 'fun' money for in your budget. when budgeting, you need to allow for fun money, and mis/accidental money so that you stick to the budget and not go crazy because you feel strapped to the budget.