2. 20.00 points Mauro Products distributes a single product, a woven basket whos

Question

2. 20.00 points Mauro Products distributes a single product, a woven basket whose selling price is $16 and whose variable expense is $13.92 per unit. The company's monthly fixed expense is $5,616 Required: 1. Solve for the company's break-even point in unit sales using the equation method. (Do not round your intermediate calculations.) baskets 2. Solve for the company's break-even point in dollar sales using the equation method and the CM ratio. (Do not round intermediate calculations. Round "CM ratio percent to nearest whole percent.) CM ratio Break-even point in dollar sales 3. Solve for the company's break-even point in unit sales using the formula method. (Do not round your intermediate calculations.) unit s baskets 4. Solve for the company's break-even point in dollar sales using the formula method and the CM ratio. (Do not round intermediate calculations. Round "CM ratio percent" to nearest whole percent.) CM ratio Break-even point in dollar sales Hints References eBook & Resources

Explanation / Answer

Question - 1

Using equation method.

px = vx + FC.............revenue = total cost

p = selling price per unit and x = number units to break even = 16

v = variable cost per unit = 13.92

FC = Fixed cost per unit = 5616

16x = 13.92x + 5616

16x - 13.92x = 5616

2.08x = 5616

x = 2700 units

Question - 2

BEP in dollar sales = BEP in units * selling price = 2700 * 16 = $ 43200

CM Ratio = ( p - v ) / p * 100 = ( 16 - 13.92 ) / 16 * 100 = 2.08 / 16 * 100 = 13 %

Question - 3

Formula method ........ BEP = FC / Contribution margin per unit = 5616 / 2.08 = 2700 Units

Question - 4

CM Ration = 13 % ( already computed in Question - 2 above)

BEP in dollar sales = FC / CM Ratio = 5616 / 0.13 = 43200

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