hapter 5 Saved Help Save &Exit; Subm 8 Check my work Mauro Products distributes
ID: 2606804 • Letter: H
Question
hapter 5 Saved Help Save &Exit; Subm 8 Check my work Mauro Products distributes a single product, a woven basket whose selling price is $13 per unit and whose variable expense is $9 per unit. The company's monthly fixed expense is $8,800. 10 points Required: 1. Calculate the company's break-even point in unit sales 2 Calcdate the copany's break-even point in dolar sales.(0o not round intermediate calculations. Round "CM ratio percent to nearest whole percent.) 3. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales? (Do not round your intermediate calculations.) eBook Hint Print Reterences 1. Break-even point in unit sales 2. Break-even point in dolar sales 3. Break-even point in unit sales baskets baskets Break-even point in dollar salesExplanation / Answer
a.Contribution margin=Sales-Variable expenses
=(13-9)=$4/unit
Hence breakeven point=Fixed cost/Contribution margin
=(8800/4)=2200 units
b.Contribution margin ratio=Contribution margin/Sales
=(4/13)=31%(Approx)
Hence breakeven point=Fixed cost/Contribution margin ratio
=(8800/0.31)=$28600.
c.Total fixed cost=(8800+600)=$9400
Hence breakeven point=(9400/4)=2350 units
Hence breakeven value=(9400/0.31)=$30550.
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