Question

# Mauro Products distributes a single product, a woven basket whose selling price is \$27 per unit...

Mauro Products distributes a single product, a woven basket whose selling price is \$27 per unit and whose variable expense is \$21 per unit. The company’s monthly fixed expense is \$12,000.

Required:

1. Calculate the company’s break-even point in unit sales.

2. Calculate the company’s break-even point in dollar sales. (Do not round intermediate calculations.)

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 intermediate calculations.)

 1. Break-even point in unit sales baskets 2. Break-even point in dollar sales 3. Break-even point in unit sales baskets Break-even point in dollar sales

1. Contribution margin per unit = Selling price - Variable cost per unit = \$27 - \$21 = \$6 per unit

Break-even point in unit sales = Fixed costs / Contribution margin per unit = \$12,000 / \$6 = 2,000 baskets

2. Break-even point in dollar sales = 2,000 baskets × \$27 = \$54,000

3. Break-even point in unit sales = New fixed costs / Contribution margin per unit = (\$12,000 + \$600) / \$6 = 2,100 baskets

Break-even point in dollar sales = 2,100 baskets × \$27 = \$56,700

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