Answer :
The correct answer is 42,000 Standard units.
To determine the number of Standard products that Sheridan Company would sell at the break-even point, we need to consider the company's weighted-average unit contribution margin, expected sales volumes, and fixed expenses. The break-even point occurs when total revenue equals total expenses, resulting in zero profit. Given the provided information, the correct answer is 42,000 Standard units.
The break-even point is the level of sales at which a company's revenue covers all its expenses, resulting in zero profit. To calculate the break-even point in terms of unit sales, we need to divide the fixed expenses by the weighted-average unit contribution margin.
In this case, Sheridan Company has a weighted-average unit contribution margin of $30 for its two products, Standard and Supreme. The fixed expenses are $2,100,000. To find the break-even point in terms of Standard units, we divide the fixed expenses by the unit contribution margin:
Break-even point (Standard units) = Fixed expenses / Unit contribution margin
Break-even point (Standard units) = $2,100,000 / $30
Break-even point (Standard units) = 70,000 units
However, the expected sales for Sheridan are 60,000 Standard units and 40,000 Supreme units. Since the break-even point occurs when total revenue equals total expenses, the number of Standard units sold at the break-even point would be 60,000 - 40,000 = 42,000 units.
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