Question

Mauro Products distributes a single product, a woven basket whose selling price is $29 per unit and whose variable expense is $23 per unit. The company’s monthly fixed expense is $7,200.

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.)

Answer 1

Answer:-

Unit Sales Price $ 29
Less ; Variable Cost per Unit $ 23
Contribution margin per Unit $ 6
Monthly Fixed Costs $ 7,200
1) Break- Even point in unit sales :
(Fixed Cost /Contribution per unit)
= (7,200/4) 1,800
2) Break- Even point in unit Dollar sales :-
(BEP units Sales price per unit )
= (1,800 29) 52,200
If the fixed cost increase by $ 600
Reverse fixed cost (7,200+600) $ 7,800
3) Break - even point in unit sales :-
(Fixed Cost / contribution per unit )
= (7,800/6) 1,300
4)Break - Even point in dollar sales:-
(BEP units Sales price per unit )
= (1,300 23) $ 29,900

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