Question

preyer corporation produce and sells a single product
data concerning the appear below selling per unit 300

variable expense per unit 42.00

fixed expense per month 542.058

the break even in monthly dollars sales is closet to

Answer #1

Given data,

selling price per unit = $300

variable expense per unit = $42

fixed expense per month = $542.058

**Calculation of BREAK EVEN POINT** **( BEP)
:**

BREAK EVEN POINT = FIXED COST / CONTRIBUTION PER UNIT

= $542.058 / 258

= $2.101

= $2 (approximately closer to)

NOTE: Contribution per unit = selling price per - variable cost per unit

= $300 - $42

= $258

**CALCULATION OF BREAK EVEN SALES ( BES):**

BREAK EVEN SALES ($) = FIXED COST / PROFIT VOLUME RATIO

= Fixed cost / PV ratio

= $542.058 / 0.86

= $630.3

= $ 630 (approximately closer to)

NOTE: PROFIT VOLUME RATIO = CONTRIBUTION / SALES

= $258 / $ 300

= 86/100

= 0.86

= 86%

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