2: Mauro Products distributes a single product, a woven basket whose selling pri

Question

2:

Mauro Products distributes a single product, a woven basket whose selling price is $19 and whose variable expense is $14.82 per unit. The company's monthly fixed expense is $6,270. Required: 1. Solve for the company's break-even point in unit sales using the equation method. (Do not round your intermediate calculations.) Break-even point in unit sales 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.) Break-even point in unit sales baskets

Explanation / Answer

2) 1) break even point in unit sales 1,500 baskets (selling price - variable expense)* units=fixed expense (19 - 14.82)   * x    = 6,270 4.18x                        = 6270 x                               = 1500 units 2) CM ratio 22% break even point in dollar sales 28500 1500 units as caluclated above so BEP in sales = 1500*19 3) break even point in unit sales 1,500 baskets formual = fixed cost/contribution margin per unit 6270/4.18 1500 4) CM ratio 22% break even point in dollar sales 28500 CM ratio = contribution/selling price per unit 4.18/19 0.22 BEP(sales) = Fixed cost/cm ratio 28500

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