Mackson Products distributes a single product, a woven basket; its selling price

Question

Mackson Products distributes a single product, a woven basket; its selling price is $8 and its variable cost is $6 per unit. The company’s monthly fixed expense is $5,500.

Solve for the company’s break-even point in unit sales using the equation method.

Solve for the company’s break-even point in sales dollars using the equation method and the CM ratio.

Solve for the company’s break-even point in unit sales using the contribution margin method.

Solve for the company’s break-even point in sales dollars using the contribution margin method and the CM ratio.

Explanation / Answer

Contribution per unit = selling price per unit - variable cost per unit = $8 - $6 = $2/unit

Contribution margin ratio = contribution per unit . selling price per unit = $2/$8 = 0.25

Break even poin in units = Fixed cost / contribution per unit = $5500 / $2 per unit = 2750 units

Break even point in dollars = Fixed cost / contribution margin ratio = $5500 / 0.25 = $22000

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.