Question

# Mauro Products distributes a single product, a woven basket whose selling price is \$15 per unit...

Mauro Products distributes a single product, a woven basket whose selling price is \$15 per unit and whose variable expense is \$13 per unit. The company’s monthly fixed expense is \$4,600.

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 units = Fixed expense / Contribution margin per unit Break-even point in units = \$4,600 / (\$15-\$13) Break-even point in units = 2,300 Units

2.

 Break-even point in Dollars = Break-even point in units * Selling price per unit Break-even point in Dollars = 2,300*\$15 Break-even point in Dollars = \$34,500

3.

 Break-even point in units = Fixed expense / Contribution margin per unit Break-even point in units = (\$4,600+\$600) / (\$15-\$13) Break-even point in units = 2,600 Units Break-even point in Dollars = Break-even point in units * Selling price per unit Break-even point in Dollars = 2,600*\$15 Break-even point in Dollars = \$39,000

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