Question

Mcdale Inc. produces and sells two products. Data concerning those products for the most recent month...

Mcdale Inc. produces and sells two products. Data concerning those products for the most recent month appear below:

Product I49V Product Z50U
Sales $ 32,000 $ 37,000
Variable expenses $ 12,000 $ 27,330

The fixed expenses of the entire company were $39,140. The break-even point for the entire company is closest to:

Multiple Choice

  • $78,470

  • $91,023

  • $39,140

  • $46,260

Business   Accounting   
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Answer #1
Product 149 V Product Z50U Total
Sales $32,000 $37,000 $69,000
Less: Variable expenses ($12,000) ($27,330) ($39,330)
Contribution Margin $20,000 $9,670 $29,670
Less: Fixed Expenses $39,140
Net Operating loss ($9,470)

Contribution Margin ratio = Contribution Margin / Sales = $29,670 / $69,000 = 0.43

Contribution Margin ratio = 0.43

Break even sales in dollars = Fixed Expenses / Contribution Margin ratio

Break even sales in dollars = $39,140 / 0.43

Break even sales in dollars = $91,023

Option 'B' is correct

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