hapter 5 Saved Help Save Exit Subm 8 Check my work Mauro Pro

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 sales

Solution

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.